| By Maureen O'Gara |
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| February 8, 2008 04:15 PM EST |
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It's unlikely, however, that Google, the target of the proposed merger, can do much of anything other than raise dust - like its move over the weekend to raise the specter of Microsoft's possible monopolization of the Internet and its illegal leverage into "new, adjacent markets."
As the Journal observes, Google would have a tough time making a bid for Yahoo itself because its owns too much of search and Internet advertising to clear the regulators, and even the alternatives - underwriting another white knight or helping Yahoo stay independent by guaranteeing "revenue in return for a Yahoo advertising outsourcing pact" - would probably meet with regulatory headwinds.
Yahoo is understood to have talked to Google lately about outsourcing its search advertising in Europe to Google and splitting the revenues. Reuters reports hearing that Yahoo, which thinks Microsoft's offer is low, may revisit talks with Google with an expanded alliance in mind.
Both the Journal and Reuters say other technology, media and financial companies also talked with Yahoo over the weekend, but obviously no counter-bid has emerged. At these prices, the field is pretty slim.
Microsoft told financial analysts Monday that it's expecting the Yahoo board to accept its offer quickly and close the deal by the end of the year even though Yahoo is saying in a statement on its web site that it could take "quite a bit of time" to agonize over its strategic options.
Given that this is a hostile bid to begin with one can imagine Microsoft being undeterred by anything the indecisive Mr. Yang and his board ultimately decide.
Microsoft also said that rather than spend its entire $21 billion wad on Yahoo it may borrow money for the first time in its life to help fund the prospective $44.6 million cash-or-stock acquisition.
One wonders if that means it's prepared to up the ante if Yahoo holds out for more money, say to cover its position in Alibaba. Microsoft may also have more acquisitions in mind.
Microsoft CEO Steve Ballmer told Wall Street Monday that his offer, with its 62% premium, is generous.
Microsoft expects the transaction to turn breakeven or accretive in second full year after the close.
Regulators are already organizing to review the bid. The House Judiciary Committee's antitrust subcommittee scheduled a hearing for Friday but cancelled it, the privacy-sensitive House Energy and Commerce Subcommittee on Commerce, Trade and Consumer Protection wants to take a crack at it this spring, the Justice Department has already declared its interest in reviewing it and the Senate Judiciary Committee antitrust subcommittee says it will look at it if the deal goes ahead. Of course the European Commission, which likes Microsoft not at all, is sure to wade in. It could impose conditions on any takeover.
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