As an Alternative to Microsoft's Bid, Yahoo to Consider Google Alliance

• Posted: Monday, February 04, 2008
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• Author: pradhana
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• Filed under: Google, Merger-Acquisition, Microsoft, Yahoo

Following a $44.6 billion takeover proposal by Microsoft, Yahoo Inc would consider a business alliance with Google Inc., a source familiar with Yahoo's strategy said on Sunday.

Yahoo management is considering revisiting talks it held with Google several months ago on an alliance as an alternative to Microsoft's bid, which, at $31 a share, Yahoo management believes undervalues the company, the source said.

Jeffrey Lindsay, an analyst from Sanford C. Bernstein, wrote in a research note that "the Microsoft bid of $31 is very astute" because it puts pressure on Yahoo management to take actions that could unlock the underlying value of Yahoo assets, which he estimates are worth upward of $39-$45 a share.

Yahoo's efforts to find an alternative bidder could simply be a measure to pressure Microsoft to boost its bid, which valued Yahoo at $44.6 billion when first announced on Friday.

Few natural bidders exist beside Google that could engage in a bidding war, and Google would be unlikely to win approval from antitrust regulators, some Wall Street analysts said on Friday.

Related articles:
Yahoo may consider Google alliance, source says
Microsoft Offers US$44.6 Billion for Yahoo

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