04 février 2008

$44.6B. A bargain.

So it was not rumors. For the past year; Microsoft tried to convince Yahoo! of a friendly merger. As I heard from trusted internal sources, Yahoo!'s founders refused. Thursday, as my previous post highlighted, Yahoo!'s stock reached a bargain price. Friday, Steve Balmer sent a letter to Yahoo!s board to propose a 62 percent premium to that day stock price, making this hostile offer a $44.6B takeover.

Let's spend few minutes on the price of the transaction.

1. $44.6B is cheap
Yahoo! has 500 Millions Unique Users a month. A short while ago, Microsoft paid $300 per UU his stake in Facebook. I even believe it's more than that when considering the guaranteed regular revenue. Especially in the light of last week Lookery's announcement to guarantee $0.125 CPM... At Facebook's UU valuation, Yahoo! is worth $150B. 3 times more.
It's also cheap when you consider the end result: $31 per stock. Over the past year, Yahoo! was traded around this price and was $34 on Oct 29th 07. Considering that all major stocks, besides MSFT, have been hammered with Q4 results and also in the light of all analysts maintaining their target prices over the next 12 months... Balmer is making an offer at fair or regular market price!
I personally believe the price will go higher...

2. But it's a lot of cash. Even for Microsoft
Paid 50 percent in cash, Microsoft will have to cut a check of $22.3B
Even for Microsoft, that's a lot of money and I'm eager to get info on how this will be finance, if you know more, please let me know. Either directly via email (my first name at emini.com) or with a comment to this post?
Which makes me believe the price will go higher but in stock exchange mostly.

Interesting week ahead...

Meanwhile, here's Google's first reaction. Here too, more to come... This is just the beginning.


Anonymous Emmanuel said...

Another conclusion: Facebook valuation is a joke (which isn't a big secret) and UU valuation incorrect...

3:31 PM  
Blogger Freddy Mini said...

Emmanuel, it seems I maybe right on this point. let's see at what the offer will end up... we shall know soon.

6:09 AM  

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