Thursday, May 15, 2008

Icahn speculation

I agree with JB's logic above, which implies that YHOO stock has already priced in an MSFT offer in the $33-35 range, which is the most likely range that at least MSFT would be comfortable with. So the question to speculate on is why is Icahn still interested? Perhaps he takes his 4-5$/share in profit and splits as soon as the dust settles down. There isn't much more in this unless he can convince MSFT to buy for a higher price, which seems unlikely.

I think he has grander plans than that. He is trying to use the shareholder discontent to push his stooges on the YHOO board. If he succeeds, then he would have both MSFT and GOOG by their balls. He could then make them bid against each other and auction off YHOO properties piecemeal. He can sell off Asian assets. Yang can't do this because YHOO is his baby and he is emotionally attached to see it destroyed. Icahn won't have any such qualms. With the market as hot as it is, (CNET and BEBO selling for billions) its not unreasonable to expect a hacked YHOO to fetch $35-$40/share in a competitive bidding situation if sold in a piecemeal fashion. This would also address regulatory issues dealing with mail and yahoo messenger. If this is how it plays out then MSFT would be a strategic loser and will regret not paying up a few more bucks to seal a deal and be able to compete effectively with GOOG

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