YHOO + MSFT = $$$

Just for fun, I bought a few shares of Yahoo this morning.  This is the first time I’ve purchased an individual stock in about 8 years, but the stock has dropped to $24 after Microsoft pulled its $33/share buyout offer off the table.

When the deal was first announced, YHOO jumped to $29 and I decided not to buy since I’d only get a 14% return if the deal was consummated.  But at $24, I’ll get a 40% return if a deal goes through — plus this price protects my downside if a deal doesn’t happen.

YHOO was trading at $19 before the MSFT offer, so $33 represents a 74% premium for shareholders.  I believe it was a breach of fiduciary duty for Jerry Yang and the Yahoo board to turn down Microsoft’s offer.  Microsoft just pulled the offer on Sunday and already shareholders are crying foul.  I think there’s a good chance that MSFT gives YHOO one more chance and the deal gets done.

[UPDATE:  At the end of trading, I’m up 4.2% and rumors are circulating that Yahoo may re-enter negotiations with Microsoft]

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One thought on “YHOO + MSFT = $$$

  1. Pingback: YHOO Update « Finding Balance

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