The inside word from the City: Takeovers

Murdoch wooing Yahoo

Thu, 14 Feb 2008 10:59:20 GMT

Valentine’s Day is finally here, and the scramble for Yahoo continues with the Murdochs reportedly joining the fray. According to Silicon Valley blog TechCrunch, Yahoo and News Corporation are allegedly in “marathon discussions” over a possible tie-up to help Yahoo avoid Microsoft’s clutches. The talk is that Uncle Roops, in cahoots with a private equity outfit, wants to combine Fox Interactive Media with Yahoo, inject a wad of cash into the entity and then float the whole lot off.

Meanwhile, the FTSE100 has flexed its muscles this morning, initially jumping 55 points and pushing past 5900, although currently it is up only 13 points to 5,893 after some glum words from UBS about 2008 trading. It must be the romance in the air, but even some steely City pundits are feeling more optimistic. Tom Hougaard at City Index reckons that if the FTSE can get above 6,000 investors could see a rally. Steady on chaps!

Cityblogger is wondering why the post hasn’t arrived yet and assuming it’s because of the mountain of cards addressed to him that will have to be delivered by tanker truck…

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Geek heartbreak on the cards?

Mon, 11 Feb 2008 11:42:14 GMT

The course of true love never did run smooth, as the great bard wrote in his famous play, A Microsoft Night’s Dream. Apologies, a slip of the keyboard – the masterpiece in question is in fact A Midsummer Night’s Dream. I doubt Bill Shakespeare had the geek lovers that are Yahoo and Microsoft in mind when he composed it, but Cityblogger knows only too well that love springs eternal in the most unlikely of places. Witness Tiddles' undying love for frozen prawns for example.

However, it seems that, following press reports over the weekend, Yahoo plans cruelly to spurn Microsoft’s attentions just as The Dream's Demetrius spurned Helena. The gargantuan internet giant recently offered $31 a share for Yahoo in an unsolicited bid, hoping to take on Google in the search engine stakes.

However, could it be that the Yahooligan is merely toying with Microsoftie’s affections and could be open to a better offer, like a coquettish young Juliet demanding a more expensive bunch of roses ahead of Valentine’s Day. It’s thought that a bid closer to $40 a share could spell marital bliss between the two. But Yahoo is evidently playing the field, reportedly flirting up a storm with other suitors, including AOL, Google and even Disney, however unlikely. The heartless harlot!

Sector analysts reckon the outcome of these internet affairs of the heart is difficult to call. “A Microsoft/Yahoo deal would be a good thing for the search engine environment,” Titus Menzies, technology analyst at Oriel Securities told Cityblogger. “[Together] they would offer a much more competitive threat to Google and it would give Microsoft a broader bandwidth. But it’s difficult to say [whether the deal will go through]. In the end it comes down to the personalities of the management.”

While Yahoo sits at home and greedily counts its many Valentine’s cards on Thursday evening, Cityblogger will be consoling himself with a Tesco’s Finest meal for one. Such is life!

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Googlehoo or Yahsoft?

Mon, 04 Feb 2008 10:00:26 GMT

The stormy geek romance that is the Microsoft Yahoo debacle continued to blaze away over the weekend. If it does actually succeed, it could be one of the biggest ever takeovers in the world.

Apparently the latest is that in order to escape Microsoft’s clutches Yahoo is considering an engagement with Google. Or ‘Goggle-eye’ as Cityblogger’s web-savvy Great Aunt Vi insists on referring to the internet giant. Cityblogger wonders what the geeks' offspring could be christened - Microhoo or Yahsoft? Although Googlehoo could be a more likely moniker now.

While it’s unlikely Jerry Yang and his Yahooligans will want to sell out, around 70 per cent of Yahoo is owned by institutional investors who witnessed Mr Yang preside over a 30 per cent collapse in the share price before Microsoft’s offer. The question is whether the institutions will see the $31 a share offer as attractive enough considering last year rumours were of a bid valuing Yahoo at more than $50bn. The shares closed at $28 on Friday and the word on Wall Street is that Microsoft could raise its offer to $40 a share. On the downside, thought, the US antitrust regulators are likely to be hovering given the sheer magnitude of the deal.

And will James Murdoch’s News Corporation also enter the fray? The mighty News Corp has previously sniffed around Yahoo, and rumours from Silicon Valley suggest Murdoch is trying to put together an alternative bid, as well as a handful of hedge funds.

Cityblogger rather likes the ring of News Hoo...

Meanwhile, Ryanair is looking less than its usual cocky self after it issued a shock profits warning. High oil prices coupled with a downturn in consumer demand could mean a 50 per cent collapse in profits for the budget airline next year. The shares are down 13 per cent to E3.16 this morning, while Easyjet's are down 7 per cent in sympathy to 432.25p. Ouch!

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Microsoft hot for Yahoo

Fri, 01 Feb 2008 12:56:12 GMT

With Valentine's Day approaching, it seems the mighty Microsoft already has romance on its mind. The software giant is busy trying to woo Yahoo for its hand in marriage.

Rather than hearts and flowers, Microsoft is offering $31 a share for the internet company, in a cash and share combination for investors, valuing Yahoo at $44.6bn - a 62 per cent premium to last night's closing price of $19.18. Microsoft's rationale is that together the two companies would provide greater economies of scale and an enhanced R&D capability, as well as $1bn in annual synergies. "We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners," commented Microsoft boss Steve Ballmer.

Unsurprisingly, Yahoo shares jumped 53 per cent to $29.13 in pre-market trading. However, some investors are sceptical that a major deal between the two companies will be finalised. But Cityblogger reflects that such a geek romance would make an awful lot of strategic sense and could produce a serious rival to Google. Watch this space!

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