Yahoo! To Buy MySpace? More Like News Corp To Buy Yahoo!
The Times newspaper reports that Yahoo! and News Corp. are in discussions for Yahoo! to give up 25% of its equity, worth $9B at today’s prices, in return for MySpace. Well, they should know - after all, News Corp. owns The Times.
What’s amazing about this is that the paper appears to suggest that the market cap of Yahoo! could rise to as much as $49B after such a transaction, saying - A quarter stake in an enlarged company would be worth $12.3 billion.
The rationale, then, look like this:
- Yahoo! gives away 25% of the company ($9B) in return for MySpace
- Great deal for Yahoo! shareholders - paying $9B for an asset worth $12B
- Yahoo! share price rockets - market cap of Yahoo! rising to $49B
The people involved in this deal seem to believe that the public markets will value MySpace at $12B. Personally, I have my doubts. I think the markets might value MySpace at way less than $12B; way less than $9B even. I just don’t see how this deal can possibly go ahead.
In reality, though, all this looks like News Corp wants to acquire Yahoo! So, maybe they should just go ahead and do it. There’s never been a better time…
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