Yahoo! - Give or Take a Billion!

by Sachin Balagopalan on February 16, 2008 · Comments

Like everyone else who follows the tech industry closely I am fascinated by Microsoft’s offer hostile take over bid for Yahoo. I have been reading about this on the blogosphere ever since the story broke and nothing amazes me more than the sheer amount of money that is involved in this deal. Microsoft initially offered $31/share which figures out to be around $44.6 billion. Then Yahoo indirectly (through the press) countered it @ $40/share and the latest speculation is they will probably meet somewhere in the middle, like $35/share.

Jerry Yang, CEO and co-founder owns a 4% stake (54.1 million shares) in the company. Here’s how much he stands to gain personally if the takeover happens:

@ $31 he makes $1.67 billion
@ $35 he makes $1.89 billion
@ $40 he makes $2.16 billion

So the difference between Microsoft’s $31 offer and Jerry’s counter price of $40 is about $490 million. I’ve always wondered what someone who had $1.67 billion would do with an extra $490 million? :)
Now lets juxtapose Jerry’s numbers with mine - I own 120 shares of Yahoo.

@ $31 I make $3720
@ $35 I make $4200
@ $40 I make $4800

The difference if Microsoft acquiesces to Yahoo’s counter price is $1080. I’m not sure what I would do with the extra $1080 either. Maybe I’ll give Jerry a call and find out what he intends to do with his winnings. ;)

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