DoubleClick, an online advertising company which survive the dot-com burst back in late 1990 was bought by Google Inc. (Nasdaq: GOOG, stock) in a deal worth $ 3.1 Billion, almost double of what Google paid YouTube.
It was reported that Microsoft bid almost the same amount for DoubleClick but Google prevail ultimately. You don’t think Microsoft will sit still watching Google flexing his muscle arrogantly, do you? Furthermore Microsoft had more than double of cash in banks compare to Google during the acquisition period. While Google has about $ 12 Billion in cash, Microsoft had $ 25 Billion in cash.
Losing the deal is not a bad deal after all, at least that’s what Warren Buffett said. What this means is the loser in a bidding war has actually won in forcing the winner to “over-pay” for something (I’m still a happy lot if I’m DoubleClick). This could be a strategy to drain Google further before the final assault.
Yahoo has recently announced its acquisition of online advertising firm Right Media for $ 680 million, a figure which doesn’t command a shout. But when Microsoft was reported to have started the negotiation to acquire Yahoo for $ 50 Billion, it raises everyone’s eyebrow. Yahoo’s Panama project which is suppose to fight heads-on with Google’s adsense is still a failure with nowhere to be seen at Adsense’s tail. Microsoft’s MSN Search is still trying to catch-up at the speed of a turtle.
Anyway, I do not think the deal of Microsoft merging with Yahoo will ever materialize. It’s too huge, complicated and culture-different a merger to goes through. Yahoo’s stock price has jumped as high as 19% after the news was reported on Friday. Yahoo’s market capitalization immediately jumped to $ 45 Billion from $ 38 Billion. But the stock pulled back after contradictory reports said the two companies may work out a joint venture or another form of cooperation that would stop short of a full merger.
Who’s the winner on such acquisition news? None other than “someone” within Goldman Sachs (NYSE: GS, stock), the investment who has been pitching the the idea of the merger. I’m pretty sure some had pocketed a huge profit out of this merger hoax. Didn’t I tell you Which Industry Should You Get A Job From?
# TIP: In most of such cases where the merger is not possible on the surface, you can make fast money by buying a Put option or short-sell. The stock price will goes down after the panic buy once the news didn’t materialize.
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May 6th, 2007 by financetwitter
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