As I stated in my last post, here are some thoughts from Reuters:
http://www.reuters.com/article/AIRDEF/idUSN0539241020080505
Why did banks advise Yahoo to not go down below $37? O well, simple answer: they did not. It was Yahoo's decision not the bankers' decision to not go below $37. If it was all for the investment banks, they would sell Yahoo for $20 per share. Afterall, they want their commission. Don't they?
M&A is a tricky business and I am happy for Yahoo! as well as for Microsoft that this transaction did not go through.
Reason:
1. Investment banks and consulting companies (almost) always overstate the synergies in the transaction. Its a simple reason: They get a large chunk of money in the form of transaction fees if the merger goes through.
2. Had the deal gone through, it would have been an uphill task for Yahoo & Microsoft to merge the work-cultures, maintain the Yahoo brand equity, and integrate the operations.
3. Consolidation in this space is not a good thing for the market. Yahoo and Microsoft both like to acquire small companies and this trend boosts the innovative landscape in the valley. Imagine what would have happened (for smaller companies’ acquisitions) if Yahoo would have ceased to exist and Microsoft would have spent a considerable chunk of its kitty on the acquisition.
Good luck to Yahoo and Microsoft. Yahoo! has to come back and execute on the “statement” that it deserves more valuation. I have no doubt in their ability but am not sure about what their strategic vision is. There should be an internal “cleansing” operation within Yahoo so that it can find its glory days once again!
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