Alex Wilhelm is a San Francisco-based writer. You can find Alex on Twitter, and on Facebook. You can reach Alex via email at [email protected] Alex Wilhelm is a San Francisco-based writer. You can find Alex on Twitter, and on Facebook. You can reach Alex via email at [email protected]
Sometimes good things come to those who have been rejected. Microsoft tried to pick up Yahoo just a few years ago, for a sum that now appears ridiculous when compared to the company’s current market value. Now, news has come forth that Microsoft is part of a consortium to pick up a minority stake in Yahoo.
Why is it doing so? To ensure that its search deal with Yahoo lives on, as it is critical for its Bing search project. What’s shocking is how cheap this insurance will be for the company. Let’s run the logic:
- Microsoft previously bid, at the maximum, some $49.6 billion for Yahoo.
- The current offer values Yahoo at around $20.6 billion.
- Microsoft is only a partner in a bid to buy a minority stake in the company.
- Microsoft and its consortium are looking to buy around 15% of Yahoo.
- Microsoft and its team will likely have to pay slightly more for the company, given bidding competition.
- However, even at a 23 billion dollar valuation or so, Microsoft and its group are only putting up, perhaps, $3.5 billion.
- Microsoft, with tens of billions in the bank, appears poised to secure its search deal with Yahoo for no more than, again ‘mathamagically’ deducing, 1.5 billion dollars.
So forget 50 billion, how does 1.5 sound? That’s a song that Microsoft wants to pay, and whistle, as it locks up Bing’s future. It’s quite the fell stroke. You almost want to applaud the company for such a cheap, and functional, move. Microsoft being frugal? What is the world coming to.
If you want to read our deep dive on Yahoo, and Microsoft’s attempted purchases of it, head here.
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