MicroHoo: To Raise the Price or Not to Raise the Price
To clarify: Of course, Microsoft doesn’t want to raise the price to grab its Yahoo prize. In fact, my reporting has indicated that the software giant has been unusually adamant that they not pay more.
In fact, sources there I speak to often indicate they still don’t want to.
Still, although I did not say Microsoft was preparing to up its $31 a share bid in a post I wrote over the weekend, others who referenced the post yesterday read it to mean that the software giant was actually readying a higher bid.
That’s not the case.
The piece I did, called “What MicroHoo Might Be Like,” was mostly an analysis of what would happen to the various elements of Yahoo post-merger if a deal came to pass.
And, at the start I did note that if Microsoft wanted to get the deal done quicker that there have been a range of options that have been bandied about in the press and among investors to make it so:
A raise in price is the most mentioned option, from $34 to $36 a share, but other things that could happen include everything from upping the cash versus stock ratio, to larding up retention packages to key Yahoo employees to giving Yahoo more independence as part of a deal.
But, in fact, as I had written a week earlier in a piece called “Yahoo Is Not a Little Black Dress,” I posited that Microsoft might want to resist bidding against itself for Yahoo.
I was a bit perplexed at why Microsoft would top its own bid and raise its $31-per-share offer for Yahoo to $34 a share, as suggested by Citigroup analyst Mark Mahaney yesterday.
There seem to be no other rivals and not much has changed since the software giant made its unsolicited offer at the start of February, except for time passing.
Of course, the only reason to do so then is to get the deal done sooner than later and perhaps the number was a public message to Microsoft CEO Steve Ballmer of that fact (as I said before, I am sure there are plenty of private messages too).
And while I am in the camp that Yahoo, well run, is probably worth a whole lot more than even $34–although perhaps not the $40 that Yahoo claimed last week–it’s still a matter of actually getting Microsoft to pay it by bidding against itself.
That might happen, of course, but only if Microsoft wants to end it now or opt for a more messier later.