Even though Microsoft’s self-imposed deadline on the Yahoo deal has passed, the company quietly leaked a report to the Wall Street Journal this week that said it was willing to pay $32-$33 per share for Yahoo. That was then followed by an update to the story claiming a final decision by Microsoft’s board has not been made.
Regardless, the very fact that Microsoft is even pleasing the thought of increasing its bid is both foolhardy and extremely flawed. Why would it want to pay more for a company that’s actually worth less?
According to the letter it originally sent to Yahoo when it first made its bid for the company, Microsoft claimed that it was offering Yahoo a 62 percent premium and as a sign of goodwill, would make the offer with both cash and the company’s stock.
A 62 percent premium? Are you kidding me? At the time, Yahoo’s stock price was barely breathing and floundering at about $19 per share. Since then, the price has gone artificially high and now Microsoft feels enjoy it should pay more to entice shareholders to its side.
I’ve some news for Microsoft — Yahoo is worth no more than $25 per share.
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source The Digital Home
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