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Analysts believe Microsoft-Yahoo! deal is near certainty

Analysts believe Microsoft-Yahoo! deal is near certainty

Microsoft's attempted $44.6bn (£22bn) bid to acquire Yahoo!, which has now stretched to a six-week stand off, is likely to succeed according to a consensus of Wall Street analysts.

Microsoft went public with its $44.6bn proposal six weeks ago, but it was rejected by Yahoo!, which claimed that the takeover bid "substantially undervalued" the company.

Despite Yahoo!'s attempts to explore a merger with other companies, including News Corporation and AOL, in the six weeks since Microsoft's bid, a Reuters poll has found that Wall Street brokers who follow either company remain convinced that Microsoft will succeed in its takeover.

Eight out of eight Microsoft analysts and 14 of 15 Yahoo! analysts surveyed believe that Microsoft will close the deal.

Andy Miedler, an analyst at Edward Jones, said: "Yahoo!'s options are becoming more limited and it makes Microsoft's offer look better."

However, there was less of a consensus among analysts concerning the value of the Microsoft bid, with some claiming the software giant must raise its half-cash, half-stock bid in order to succeed.

Others said that Microsoft need not increase its offer above the current $31-per-share bid, although some argue it may need to sweeten the bid by making it an all-cash offer.

In light of Yahoo!'s failure to find an viable alternative to Microsoft's offer, the poll's findings are unsurprising.

Analysts expect Yahoo! to draw a blank in its effort to find an alternative partner, with Rupert Murdoch having recently said he would not try to beat Microsoft to the Yahoo! deal.

Last Thursday, AOL said it had agreed to acquire social networking site Bebo for $850m in a move some say is a sign that parent company Time Warner has plans that do not include Yahoo!.

According to reports, senior executives from Yahoo! and Microsoft met on Monday to discuss the vision for the merged company in the first meeting since Microsoft's bid on February 1.

The meeting has been interpreted as a breakthrough in the stand-off between the two sides, that could lead to deeper discussions and ultimately a deal.


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