Who's Yahoo! going to merge with? AOL? Microsoft? News Corp?

Grudun answered 8 months ago …

If you listen to the current Yahoo! management they will never merge with Microsoft. With the news that News Corp and AOL are interested I think that that will at least temporarily prevent the Yahoo! investors from quickly giving in to Microsoft thinking it is their best bet. I see 3 possible outcomes:
1. There is a small bidding battle between the prospective suitors because non of them would want the others to acquire Yahoo! most likely resulting in a higher price from Microsoft(they actually have most of the cash they need and would not run into financing problems).
2. The news of AOL's and News Corp's interest turns out to be just words with no action. In this case I see Microsoft pushing for a proxy battle but with a 50-50 shot because they will have lost momentum addressing the other parties' interest.
3. The Google-Yahoo! ad partnership yields fruit(a perfect synergy, Google indexes data but Yahoo! provides a portal and content). This would see Yahoo! making large cutbacks in their workforce and taking a hit in their revenue but providing a base for long term "independent" survival. But as soon as this action is anounced Microsoft will be filing anti-trust lawsuits(they have lawyers who know the area and can fight the areguements Microsoft used). Resulting in a drawnout battle that will be a weight on Yahoo!'s stock price until it is resolved.

All in all an interesting situation but still very much in the air. The next step will be watching AOL and News Corp to see if their interest has any substance. Then trying to get information on the Google-Yahoo! experiment that will finish in about 2 weeks. During this time you can almost ignore Microsoft's posturing because no major Yahoo! shareholders will act until they know if scenerios 1 and 3 are possible.