Google Joins the Fray

Although a Google acquisition of a bulk of Yahoo! stocks would set back anti-trust laws by about a century, rumours are abound in Silicon Valley the search engine powerhouse is fleshing out a deal to bid for 20% of Yahoo!’s troubled stocks in an effort to shoo Microsoft away from a hostile take-over of Yahoo!

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Google guys pull a fast one...again

After Microsoft’s CEO, Steve Ballmer, circulated a letter to Yahoo!’s shareholders earlier this month highlighting the tenets of their offer for Yahoo!, Google hired merger and acquisition specialist, Steve Boutros, and his company Credit Suisse to pencil out a strategy that will not raise anti-competition red flags at the Federal Trade Commission.

While it seems very unlikely the Google guys will achieve any success with this attempt, precedence shows that the company’s top visionaries, Sergey Brin and Larry Page, have used their “Do no evil” mantra to get into the good books of the regulatory institutions which have given the golden child of internet search the green-light on just about every acquisition.
No-one is safe doubting the Google guys, after-all, Larry, as a student at Stanford, created an ink-jet printer from lego blocks. Who even thinks of that?

In a parallel universe, News Corporation’s head suit, Rupert Murdock, is considering a retraction of his earlier decision to leave the proposal for a Micro-Hoo marriage alone. This opens the portals for several questions.

Jerry Yang has to face the reality…somebody is going to acquire Yahoo!….just a matter of time.

Yahoo!’s CEO, Jerry Yang, refused Microsoft’s bid on grounds that his struggling brainchild is worth $US3 more per share, which will raise the bid to the $US50 billion mark. As Microsoft was the only one courting Yahoo! up to last week, Bill Gates and Ballmer opted for a proxy war as antecedent to kicking out the current Yahoo! board in the next elections on 13th March. Now that News Corporation, which also owns Fox News and MySpace, is toying with the idea to enter the auction, will Gates still hold that the original 62% premium offered on Yahoo!’s share as a ‘fair offer,’? Or will Gates now send the figure north and stymie any other deal which, will almost certain, not match that price?

If Yahoo! decides to accept Google’s rumoured offer to be a large shareholder, Yang will then get more time to think about those ‘strategic alternatives…to remain independent,’ while enjoying a solid Google bail-out. If Google’s effort to close this deal is crushed by the federal authorities, and Yahoo! accepts a deal from News Corporation, it will still outsource its search engine arm to Google in order to give News Corporation a worthwhile return on its investments.

Whatever the outcome, Jerry Yang simply has to face the reality that Yahoo! cannot operate profitably as an independent enterprise. Somebody is going to acquire Yahoo!. It is only a matter of time.

Raquel Ingram is a writer in Toronto, raquel.ingram@abengnews.com

     

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