Microsoft is still hot on the trail of Yahoo and the question of will it/won’t it be a hostile acquisition is back at the top of everyone’s brain. Microsoft has issued Yahoo a three-week deadline to sort itself out peacefully (read: come to terms) before a hostile takeover becomes imminent.
Why won’t this thing just go away? Aren’t these two adult-run companies able to see the big picture? The quibbling of two secondary competitors, while another lengthens its lead, has resulted in the downfall of many in the past. When will they just get on with something more exciting, like combining forces to take over the world?
This week, I humbly offer some advice for both sides.
Make Nice-Nice for the Government(s)
There will be some regulatory approval. Your competitors will cry foul and you won’t have an easy task before you with disgruntled board members. I know this should go without saying, but the same people you’re hurling insults at now, will be the same people you will be sitting across from in the boardroom.
Sure, one can say this process isn’t personal (and it isn’t) but it always seems to end up that way, doesn’t it? “Just business” isn’t a deus ex machina that will allow you behave any way you like. The aftermath of pre-merger behavior like this will be a polarizing ripple effect that may cost you some of your best talent, as workers on each side of the coin take sides.
So start behaving yourself, or the stock price will be the least of your worries.
Upping the Share Price
Spending a great deal of time with the media has its ups and downs. When Microsoft first announced its acquisition intentions, the Associated Press asked me what it would take to make this thing happen. My response was a simple solution to a very complex problem: up the share price a couple of bucks and call it a day.
Well, that portion of my AP interview ended up on the cutting room floor. Leaving aside the Yahoo managers’ whose strike price is less than Microsoft’s offer, the landscape has changed since the offer was made in January.
Thirty-one dollars a share now seems like a far-off dream.
As the Wall Street Journal calculated this week, getting back to the original $31 per share price would cost Microsoft $2 billion and getting to Yahoo’s desired price of $35 per share would cost Microsoft $8 billion.
In short, the market has changed, the share prices have dropped. It’s time for both of you to get over yourselves and come to an agreement. Everyone else has to deal with a diving economy, why should you be any different?
Consolidate and Remove Conflicts
Google is selling off its search marketing unit, what are you waiting for? Microsoft’s ownership of a third-party unbiased agency could get in the way of what it’s really after. While the world may no longer care about conflicts, the simple truth is that selling any agency components makes things much easier to swallow.
An agency won’t support the business, the margins aren’t spectacular, and ad sales and agency go together like Eliot Spitzer and public office. You simply can’t put the goldfish in your piranha tank and expect everyone to live happily ever after.
Besides, there are plenty of agency holding companies out there looking for a fire sale in search marketing firms. Do it fast, before the talent (and all the equity) walks.