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Yahoo-Google Deal is Imminent, So is Microsoft Decision

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The Wall Street Journal is yet again providing Microhoogle scoops this morning. First up, Yahoo may announce a deal with Google to run its search ads. A few weeks ago, we learned that the tests of those ads were successful. And though the Justice Department is concerned about the partnership, the agreement will likely be nonexclusive, which should alleviate regulators' fears.

But regulators are not the only ones with fears that Yahoo needs to alleviate. Wall Street and shareholders have been waiting with baited breath to see if Microsoft and Yahoo could reach an agreement on price for the proposed acquisition. But the two remain divided on the value of Yahoo, and Microsoft is expected to make an announcement about whether it will pursue a hostile takeover of Yahoo or walk away from its unsolicited bid.

Even if Microsoft announces a hostile takeover, the Yahoo-Google deal could still go through. The agreement will likely use Right Media's ad exchange which employs a real-time auction system. Yahoo acquired Right Media last year. At least one analyst, Citigroup's Mark Mahaney, has the deal as bringing Yahoo an additional $1 billion a year in revenue. Mahaney previously predicted that Microsoft would increase it's offer to $34 per share based on Yahoo's revenue projections for the next three years. Earlier this week, Microsoft indicated it would offer $32-33, while Yahoo wants upwards of $35-37. The original offer is for $31 per share.


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