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Will Microsoft be the Next Company to Raise Its Bid to Acquire Yahoo?

 March 25, 2008 11:46 AM
 


After JPMorgan Chase & Co (NYSE: JPM) raised its bid for the stock of The Bear Stearns Companies Inc (NYSE: BSC) from $2 to $10, speculation has began to build that Microsoft Corp (NASDAQ: MSFT) will follow JPMorgan's lead and increase its offer for the shares of Yahoo! Inc (NASDAQ: YHOO).

On Tuesday morning, MarketWatch reported that a financial expert believes that Microsoft should raise its bid to $34 per share.

"We believe that a Yahoo sale to Microsoft -- at a price likely higher than the initial $31 bid -- is the most likely outcome," the MarketWatch online article quote's the Citigroup broker as saying.

[Related -Citigroup Inc (C): A Favorite Bank Stock Is Again A Certifiable Bargain]

The Microsoft bid $44.6 billion was rejected by Yahoo's Board of Directors shortly after it was tendered around Feb 1.

Despite the testy public statements exchanged by the two companies in the bids' immediate aftermath, the evidence shows that the companies have strong board-room connections that could point to the potential for ongoing discussions between the two companies.

NewsVisual created an IntellectSpace Knowledge Map that demonstrates the likelihood of strong personal connections among the members of the two companies' Board of Directors.

[Related -Why it’s time to sell Microsoft]

The first connection runs through the investment-banking firm Morgan Stanley.  Microsoft Director Charles H Noski and Yahoo Chairman Roy Bostock would certainly be acquainted with one another since they both currently serve on Morgan Stanley's board.

Given Bostock's influence within Yahoo, it's highly probably that Microsoft would rely on Noski as a back channel for keeping the buyout negotiations open.

The Knowledge Map also illustrates another potential axis of connection between the Yahoo and Microsoft board rooms that lies through Stanford University.

Although it's unlikely that they were classmates because of their age disparities, Yahoo CEO Jerry Yang, 37, could have a personal connection to Microsoft Directors Reed Hastings, 46, and David F Marquardt, 58, through Stanford's alumni organization or one of the University's other social networks.

Anyone of these personal connections that the Map depicts could serve as a conduit for keeping the talks between Yahoo and Microsoft on life support.

Click here for an interactive and fuller version of this IntellectSpace Knowledge Map.

(Note: the information contained and presented in Knowledge Maps is public information from the Securities and Exchange Commission of the United States of America).

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