Around the Net

Yahoo/News Corp. Deal a Real Possibility

Two sources tell the blog that News Corp. and Yahoo are discussing some kind of transaction ("or at least the appearance of one"). It's unclear how serious the negotiations are. News Corp. has repeatedly stated that it's not interested in buying Yahoo, so a possible deal may include News Corp. giving Yahoo MySpace or all of Fox Interactive plus cash in exchange for a major stake in the company. His estimate: News Corp. sells FIM for $6 billion (a P/E of roughly 30 times operating profit) plus another $9 billion in cash from itself and a private equity firm in exchange for a one-third equity stake in Yahoo.

This assumes that News Corp. wants to reduce its direct role in interactive advertising in order to focus more on content. On the other hand, Yahoo would have to convince shareholders that this is a better alternative than becoming part of Microsoft-which might entail a more laborious transition.

Meanwhile, TechCrunch's Michael Arrington (link: http://www.techcrunch.com/2008/02/12/yahoo-and-news-corp-continue-marathon-discussions-possible-bid-to-counter-microsoft/), through another unnamed source, confirms the SAI rumor, saying a deal would make the News Corp./private equity tandem the largest single shareholder in Yahoo/FIM, placing it in control of the combined company. This is certainly a threat to Microsoft, which should force the software giant to up its bid to north of $35 per share.

Read the whole story at Silicon Alley Insider »

Next story loading loading..