Rumor: Google Purchasing 20% of Yahoo Shares to Combat Microsoft Bid

Google is continuing to try to disrupt Microsoft’s bid for Yahoo, and, we’ve heard, may even be considering a bid to acquire a significant chunk of Yahoo’s stock. Google clearly wants to see the status quo continue in the search space, and would rather fight a fragmented market than a single, stronger, Microsoft/Yahoo. Sources with knowledge of the deal are saying that Google also hired veteran M&A expert George Boutros as Credit Suisse the day after the Microsoft bid was made, to advise them on how to respond to the deal. That advice, one source says, may be leading Google to place an unsolicited bid to acquire just under 20% of Yahoo’s stock at an inflated price. The goal isn’t so much to close the deal, which would almost certainly be opposed by U.S. regulatory agencies. But rather to throw another curve ball at the Yahoo Board, which is already dealing with the Microsoft bid and a likely challenge to their board seats this June. If the Yahoo Board, particularly the outside board members, were preparing to fold to Microsoft, a Google bid might give them pause. And any delay buys Google time - during which other factors can come into play to stop the deal. “It’s a relatively cheap way for Google to confuse the situation further, and, potentially delay or disrupt a Microsoft acquisition” said one advisor to the deal, requesting to remain anonymous. Assuming Microsoft does not back away from its bid, look for them to nominate their own slate of directors for the Yahoo board a few days in advance of the March 13 deadline. Google, or anyone else who might try to disrupt this deal, will likely make their move before then.
http://www.techcrunch.com/2008/02/27/were-sorting-through-some-crazy-googleyahoo-rumors/