It’s still very early in the Microsoft-Yahoo.com deal.
There are several factors that could prevent the deal from happening.
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A higher bidder.
Microsoft offered 44.6 billion dollars for Yahoo. Another bidder may come to the table with more.
There are numerous other possible bidders including, News Corp, (NWS) the owner of Fox and Myspace.com.
There is Baidu (BIDU) china’s leading search engine. The second most used search engine in China is the Alibaba Group (OOTC:ALBCF). The Alibaba group is owned 40% by Yahoo. Currently Baidu provides search monetization service for Microsoft’s China traffic. If Microsoft buys Yahoo, Baidu might get cut out of the deal with Microsoft. This may give Baidu all the reason to buy Yahoo. If Microsoft does go ahead with the acquisition of Yahoo, Baidu may be the big loser in China.
Likewise Ailbaba might bid for Yahoo to protect its position with Microsoft and not allow Baidu to gain control.
Another buyer might be Interactive Corp (IACI) which already last year announced plans to spin off several components of the company into different public companies.
Finally do not discount the possibility of either Google itself coming in to place a bid or Time Warner (TMX) the owner of AOL.
AOL has been reportedly looking for a partner to acquire or to be acquired for quite a while. If the Microsoft- Yahoo goes forward, AOL will have fewer potential suitors. The deal also would create another formidable rival for AOL at a time when its results have been disappointing.
Maybe this will force Time Warner’s Hand to make a move. By the way, Time Warner reports fourth-quarter results thisweek.
2. Yahoo may reject the deal.
If Microsoft acquires Yahoo it has already said it will attempt to consolidate its workforce and getting rid of overlapping operations, and employees of Yahoo.com, and try to save a Billion Dollars a year. This may not go down well with the Folks at Yahoo.com which still has not accepted the deal.
Microsoft has rumored to purchase Yahoo.com on at least two separate occasions and Yahoo has declined. It could happen again.
3. The U.S Department of Justice may block the deal. It certainly will have to approve it to move forward. Google released a statement today on its blog (which we posted earlier) raising certain antitrust issues. These issues will all have to be addressed and there will be pressure applied from other companies drawing attention to these issues.
4. The European Union, which has given Microsoft, fits for the past few years may also block the deal.
Certainly there are interesting days ahead.
