BloggingStocks is saying that this is a favorable deal for Rupert Murdoch and a questionable one for Yahoo.
If Murdoch could complete this deal, he would realize a 21x increase in the value of his $580 million investment back in the summer of 2005. Yahoo was worth $37 billion yesterday, 25% of which would be worth $12.3 billion. And the nice thing for Murdoch about getting stock would be that he would not need to pay tax on the gain until he cashed out the Yahoo shares.
But for Yahoo, the deal would be of questionable value. As Murdoch pointed out in a recent interview, Facebook is grabbing share from MySpace. From this comment, I infer that Murdoch is not eager to or does not know how to adapt MySpace to regain the competitive initiative. Moreover, Yahoo is so stressed out trying to compete with Google, Inc. (NASDAQ: GOOG), that it will not be able to devote the resources needed to keep up with Facebook.
Editor’s question: If you’re Yahoo, would you go for this deal?
Originally posted on June 20, 2007 @ 10:18 am