By Emil Protalinski | Published: February 05, 2008 – 08:59AM CT
It’s going to be a mixture of the cash we have on hand plus debt. We could fund most of that through our cash holdings, but it’s likely we’re actually going to borrow for the first time. It will be a mixture of the cash on hand, plus debt.
The cash portion of the deal would be more than $20 billion, and since Microsoft had about $21.1 billion in cash and cash equivalents at the end of its most recent quarter, the software giant would have to spend itself dry to buy out Yahoo without a loan. The fact that this would be the first time in its history that Microsoft would need to borrow money may sound a bit impressive, but the acquisition would also be Microsoft’s largest to date (the current largest is the all-cash purchase of aQuantive for $6 billion in August 2007). Liddell did not say how much external financing Microsoft would seek.
Liddell also declined to say whether Microsoft was already buying up its Internet rival’s stock on the open market in an effort to exert greater control over the company’s board. Liddell did reveal, though, that he expects Microsoft’s revenue to grow at a double-digit rate in the coming fiscal year, despite a potential economic slowdown in the United States.
Microsoft CEO Steve Ballmer was also present at the meeting. He stated his belief that the offer for Yahoo was a generous one (the proposed $31 per share represented a 62 percent premium over Yahoo’s closing stock price the day before Microsoft’s announcement) and that he expected Yahoo’s board and shareholders to agree to the buyout quickly. Microsoft said that combining with Yahoo would speed up the process of building a company capable of capturing 40 percent of the digital advertising market.
Ballmer noted, however, that if the company was successful in its bid, it would continue to invest in building the business. “We’re trying to increase scale and increase capacity to give ourselves a better chance to be more successful more quickly,” he said.
- New York Times: “Microsoft Says It May Borrow to Acquire Yahoo“