Yahoo Trying Google News Corp Escape Routes

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Yahoo Trying Google, News Corp. Escape Routes

By: Nathan Weinberg
2008-02-14

Yahoos board is trying any port in a storm to find a way out of getting bought by Microsoft, looking to partnership deals with Google and...

... News Corporation. Yahoos attempt to outsource its search business to Google in return for the financial stability to hold off Microsoft appears to have failed, with Google backing out to avoid mounting antitrust concerns, but an eight-month old News Corp deal is moving again.

Under the old deal, News Corp would deal MySpace and IGN to Yahoo in exchange for 30% of the companys stock (stock created by a secondary public offering), valuing MySpace/IGN at $12.3 billion and the new Yahoo at $49 billion. The new deal would likely offer News Corp 19.9% of Yahoo, or $10-11 billion, with the 19.9% number chosen for some really scummy reasons: Any deal under 20% of the company doesnt need to be approved by shareholders.

While the job of a companys board is supposed to be to create shareholder value, Yahoos ruling class has made it clear that they want to save the current incarnation of the company, whether or not that is good for investors. This proposal would deal away almost a fifth of the company, specifically designed to sneak in beneath rules designed to protect shareholders.

If Yahoos board wants to make it clear to investors that it doesnt have their best interests in mind, this deal would do it. If Microsoft pushes ahead for a hostile takeover, Yahoo shareholders are going to have some really good reasons to side with the Redmond giant.

According to Valleywag, the MySpace deal is being held up by disagreement of the value of MySpace, which makes sense. If MySpace was worth $12.3 billion eight months ago, when Yahoo was less desperate, would it really be worth $2 billion less now, when Yahoos board wants it more than anything?

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About the Author:
Nathan Weinberg writes the popular InsideGoogle blog, offering the latest news and insights about Google and search engines.

Visit the InsideGoogle blog.


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