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Google to Bid for Yahoo Stake?

TechCrunch has the hot rumor of the day: Google is apparently far more scared of a Microsoft-Yahoo merger than previously thought and could be preparing an offer to purchase 15-20 percent of Yahoo's stock. Henry Blodget of the Silicon Alley Insider (link: http://www.alleyinsider.com/2008/2/google_to_buy_19_9__of_yahoo_to_block_msft__why_not__they_ve_done_it_before) reminds us that this is a play that Google has used against Microsoft before, when it swooped in at the 11th hour to purchase a $1 billion 5 percent stake in AOL.

In any event, what's so scary about Micro-hoo? Haven't most analysts predicted that the merger would be a win for Google? Apparently, Google's been jittery about the idea from the start, as sources say the search giant hired an M&A expert from Credit Suisse the day after the Yahoo bid was announced, in order to advise the company on how best to respond. The report claims that Google would rather fight in a fragmented search market than compete with a combined Microsoft/Yahoo.

That said, report author Michael Arrington calls the Google stake purchase "a long shot at best," adding that the goal here isn't really to close a deal (regulators would have a hard time passing this one), but rather to further delay a decision from the Yahoo board.

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