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Technology Deals Microhoo! - The Empire Strikes Back
Technology Deals Microhoo! - The Empire Strikes Back | Microhoo! - The Empire Strikes Back |
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| by Stephen Withers | |
| Tuesday, 12 February 2008 | |
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Microsoft's $US31 per share offer values Yahoo! at almost $US45 billion, or more than 60 percent above its market capitalisation immediately prior to the offer. During the early years of this decade, Microsoft carried large cash reserves peaking at over $US64 billion in September 2004. Since then, the company has reduced its cash holdings by paying dividends and buying back its own shares. Its last balance sheet showed $US19 billion in cash, so the half-cash, half-stock offer for Yahoo! seems practically certain to involve the company going uncharacteristically into debt to fund the takeover - assuming the deal goes ahead. Yahoo!'s board appears to be holding out for a higher offer, whether from Microsoft or another suitor. Microsoft, in turn, seems in no rush to increase its bid. "The Yahoo! response does not change our belief in the strategic and financial merits of our proposal," Microsoft officials said in the statement. "As we have said previously, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!'s shareholders are provided with the opportunity to realize the value inherent in our proposal." Just under 10 percent of Yahoo shares are held by insiders, with another 71 percent in the hands of institutions. Even if those institutional investors still have faith in Yahoo!'s management and board, they will surely be looking closely at Microsoft's offer and Yahoo!'s future prospects.
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