Google Advised to Bid for ~20% of Yahoo!

As the weeks keep flying and nothing worthy of mentioning is happening after Yahoo! turned down Microsoft’s unsolicited bid, rumors are starting to get leaked and suppositions made.
The lawsuits filed against the Sunnyvale-based company are something of lesser importance, because they are in a unsolvable situation whichever way the coin flips. Out of the seven suits, there are two accusing Yahoo! of encouraging MS to bid, and others that demand the sales as being in the shareholders’ best interest. It doesn’t matter what Yahoo! does, it will still get sued.

Google responded very quickly when Microsoft made the big announcement. In an instant, a press release was put together, deeming the bid as dangerous, and the next day, investment banker George Boutros was hired for advice. "Boutros is known in M&A circles as a briefcase slammer. […] The kind of negotiator who will do whatever it takes to make the other guy blink," Valleywag quoted Adam Lashinsky.

Two weeks’ work later, the solution presented to Google’s directors was that the Mountain View-based company should bid for just under 20 percent if Yahoo!’s stock at an inflated price. There are two theories as to why that is. The first, presented by Michael Arrington of TechCrunch, is that "Google clearly wants to see the status quo continue in the search space, and would rather fight a fragmented market than a single, stronger, Microsoft/Yahoo."

The second has a lot more to do with chaos and mayhem, that would destabilize the two companies currently involved in their very own cold war right now: Microsoft shareholders are unhappy and penalized the Redmond giant severely by lowering its stock value, while Yahoo! is hit with lawsuits and has talent departing due to the vesting packages that just expired. If crazy is what Google’s after, it did a very good job. I wonder if the bid is actually made what will be to come.

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