Microsoft’s Yahoo bid decreases in value

When Microsoft made its surprise $44.6 billion bid on Yahoo last week, the company was offering to pay about 26% over Yahoo’s market value—a fairly solid amount of slack to lure Yahoo shareholders. However, as the Sillicon Valley Insider reports, the value of Microsoft’s offer has dropped considerably since then.

Microsoft’s $44.6 billion offer is actually split up as half cash and half Microsoft shares, with a fixed exchange ratio of 0.9509 Yahoo shares for every Microsoft share, the Insider says. The problem is, Microsoft’s share price has dropped from $33 to $29 since the bid was announced, so Microsoft’s offer now stands at an effective $29.50 per share. In the meantime, Yahoo’s share price has climbed to almost exactly $29 since the offer was made.

According to the Sillicon Valley Insider, Microsoft will need to reset the exchange ratio to get back to the initial $31 a share, which will increase dilution and leave existing shareholders “holding a smaller percent of the combined company.” Microsoft shareholders are reportedly unhappy with the deal, and Yahoo is rumored to be looking for a way out by talking to Google.

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    • marvelous
    • 12 years ago

    Why is MS so pressed to buy yahoo?

    • pogsnet
    • 12 years ago
      • willyolio
      • 12 years ago

      conclusion does not follow from premises.

      • Byzantine1453
      • 12 years ago

      I curse the day that an Apple OS would be like that.

        • tesla120
        • 12 years ago

        you can already finagle OSX onto an intel machine.

      • Mithent
      • 12 years ago

      (reply to #7) I agree.. it would give Apple even less motive to release OS X on non-Apple hardware, a move that would already be a bad idea.

    • krazyredboy
    • 12 years ago

    Could this create Goohoo?

      • etilena
      • 12 years ago

      Or a Yagle?

      • Nitrodist
      • 12 years ago

      YAAAAAAAAAAAAAAAAAAAAAAGGGGGGGGGGGGGGGGGGGOoooooooooooooooooooooooooooooooooooohoooooo!

        • indeego
        • 12 years ago

        I like g{

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