Google Might Buy Yahoo but Microsoft Might Get There First
posted Thursday Nov 3, 2011 by Nicholas DiMeo
When Hulu went up for sale, it seemed that Yahoo, among other companies, was at the top of the running list to acquire the video streaming service. However, we learned a couple of weeks ago that Hulu was backing out of its proposed sale, partly due to Disney not agreeing with anyone. Yahoo pulled out shortly before the end of the sale, citing controversial and internal problems within the company.
This week, after rumors were flying for several days, we have learned that Yahoo has been shopping around for possible buyers. Not only that, we discovered that Google has contacted several private equity firms in order to aid them in the purchase of Yahoo.
Will Google be able to take out one of its top competitors with this move? What happens now? Details are after the break.
Let's first talk about why Google, which underwent a couple of rounds of downsizing, needs to reach out to a third party in order to gain investment to buy a company. Back in June, Google's anti-trust investigation got them into a little trouble with the government, and the damage so far has totaled over $500 million. There just isn't much free cash lying around for them to take and go spend on an acquisition without the government turning around and raising an eyebrow to it.
Now, why does Google want Yahoo? While Google may virtually own the search engine market, Yahoo's 700 million searchers and users would certainly look better for Google under their multi-colored flagship.
Further, it's not just Apple who has the "me too" mindset. Whenever Microsoft, who is taking more and more search engine share by each passing day, wants a product, Google is right behind them, waving their hands in the air, wanting it, too. If Microsoft is able to pick up Yahoo, then their market hold would increase by almost double. This would make Bing the only other company with over 5% in market share.
Reports have come in that Microsoft is looking to get some preferred stock and "influence" Yahoo's future endeavors with a possible joint bid.
Microsoft Corp. may help to bankroll a potential joint bid for Yahoo by extending loans to its deal partners and buying preferred stock in Yahoo. The software giant has been in discussions about a potential joint proposal for Yahoo with private-equity firm Silver Lake Partners and the Canada Pension Plan Investment Board.
Microsoft is not seeking full ownership of Yahoo, but rather acting in effect as a financier partly in exchange for being able to retain some influence over Yahoo's future.
Here's a fun fact: the potential Google purchase of Yahoo has caused Yahoo's stocks to rise by over 3%. I am unsure why people are happy about Google owning a whole part of the Internet. However, there still lies the anti-trust and government agencies who are still waiting for Google to lift a finger the wrong way. We'll see if they even make an official bid here soon.