You Had To See This Coming – MSFT To Buy YHOO

I was going to buy Yahoo! the other day. Mark and I were emailing. I was asking how much Yahoo!’s core search business was worth if it was given over to Google. He though maybe as much as $9/share. I looked into the value of Yahoo! Japan and Alibaba. I left a comment on Paul Kedrosky’s blog post about Yahoo!. And I told Portfolio Magazine that the timing was perfect for Microsoft to buy Yahoo!.

But of course I never got around to buying the stock.

We all knew this was coming. Yahoo! was cheap. Too cheap. And a mess. Rats were leaving the sinking ship en masse. It was not sustainable. Something had to happen.

And so the most logical thing has now happened. Microsoft has swooped in with a $44.6bn offer to buy Yahoo! The news is posted on Marketwatch but there is no story yet. WSJ has a small story up now. Danny Sullivan has a great post on Search Engine Land discussing the merits of the deal.

The price offered is an ~70% premium to the closing price last night. This deal will happen unless another strategic wants it (News Corp?). Because at that price, no financial buyer can make the deal work, particularly in this financing environment.