News Corp. Scrambles To Bid For Yahoo
The rumors keep on rolling around the surprise semi-hostile Microsoft bid for Yahoo this morning. Sillicon Alley Insider says they've heard that a couple of hedge funds were already preparing their own bids for Yahoo, and were (or perhaps still are) days away from making their move.
Context & Ripple Effects
Microsoft's semi-hostile approach to Yahoo revives a courtship that first surfaced as rumor back in May 2007, when the New York Times reported Microsoft-Yahoo deal talk — so today's scramble is round two of a nine-month-old story, not a bolt from the blue. The offer has traveled unusually fast: same-day pickups run from Daring Fireball's $44.6 billion figure to Paul Kedrosky's 'Killing the Deal, 101' and Compete's math valuing Yahoo visitors at $1,200 apiece.
What is new in this installment, per Silicon Alley Insider, is that hedge funds were reportedly days away from filing their own bids before Microsoft jumped the queue, and News Corp. is now reportedly scrambling to put a rival bid together — both claims remain unconfirmed rumor, not settled fact.
First-order effects
- Yahoo's board faces a compressed decision window: it must weigh a semi-hostile Microsoft offer against two rumored rival bidders — News Corp. and unnamed hedge funds — any of which changes what a 'fair' response looks like.
Second-order effects
- If News Corp.'s bid materializes, Microsoft faces an actual contest rather than a lone target, and Compete's $1,200-per-visitor framing gives every bidder a shared yardstick to argue the price up from.
- User-side friction is already visible in the pickup: Compiler reports a Flickr rebellion brewing and Open Source flags Microsoft inheriting Yahoo's open-source projects — reputational costs none of the bidders have priced publicly.
Third-order effects
- If hedge funds really were preparing independent bids, portal-scale consumer web assets become targets for financial buyers as well as strategics — widening who can own major internet platforms and how such deals get financed.
The trend: Portal-era web companies are consolidating through contested, multi-bidder takeover fights in which financial players now sit at the table alongside strategic acquirers.