Another Reason MSFT Won't Raise YHOO Offer: Capital Research

A major shareholder in both Yahoo and Microsoft, Capital Research, met with Steve Ballmer yesterday to assess his willingness to increase Microsoft's Yahoo bid, the Post reports. Why? Because Capital, which owns 11.4% of Yahoo and 6%+ of Microsoft, wants to make sure that it won't lose more money on its Microsoft position than it makes on its Yahoo one (which it might, if Ballmer jacks up his bid).

So let's review the reasons why Microsoft probably won't raise its Yahoo offer, even back to the original $31:

• No other bidders
• No other good alternatives
• No negotiating leverage (for Yahoo)
  
• Likely outrage and lawsuits if Yahoo tries to walk away.
• Pressure on Microsoft by already annoyed Microsoft shareholders
  

In short, Microsoft probably won't raise its offer because it doesn't have to. Given the lack of other potential bidders, Yahoo shareholders should probably reassess the odds of Microsoft's offer even getting back to $31, let alone jumping to $35 or $40.

See Also:
Will Microsoft Raise Its Bid Back to $31? Doubtful
Yahoo's Likely Response to Microsoft: "Let's Talk"
Yahoo Board May Meet Today to Decide Company's Fate
Introducing the SAI MSFT-YHOO Bid Calculator! (Check here for the current value of the bid)
Softbank to Save Yahoo? "Talks Have Just Started"