Ivory Investment Management can’t order anyone to do anything. Since it’s only in control of 1.5 percent of Yahoo’s stock, Ivory may not even be able to make suggestions using a loud voice. Still, the investment firm is adding to all the previous Yahoo-Microsoft mess by recommending a sale of Yahoo’s search business.
Ivory’s at least got a complete plan. In a letter to Yahoo’s board, its managing partner, Curtis Macnguyen, named a price of around $15 billion and wrote, “We envision a deal whereby Microsoft would acquire all of Yahoo’s search assets and enter into a perpetual agreement for Microsoft to be the search provider for all Yahoo properties. In this deal, Microsoft would own and operate the combined search platform while Yahoo would become an affiliate that retains 80% of the revenues generated from the search traffic on its own sites.”
According to Macnguyen, the arrangement would eliminate around $800 million in duplicate operating costs and result in 20 percent higher monetization rates. Yahoo’s investors might see its value return to the neighborhood of $24 per share.
Only it’s hard to see how Microsoft would find the deal truly attractive. Even though Yahoo’s shares have risen almost nine percent so far today, the company’s market cap is still just $18.39 billion. And as Microsoft proved last week with the hire of Qi Lu, Steve Ballmer is finding ways to get what he wants without worrying about the whole corporation.
Don’t count on Ivory’s idea resolving this never-ending negotiation.
