Yahoo! Partnership Valuation

Deal Journal over at the WSJ explores the valuation of various possible Microsoft, Yahoo!, News Corp, Google, AOL partnerships. Adding Google in the exercise is probably purely academic given that anti-trust regulations would preclude any potential Google-Yahoo alliance. Sanford C. Bernstein figures that a Yahoo-AOL-Google structure would increase the valuation of Yahoo! to $37.01 per share, after adding more than $550 million in earnings EBITA. Interestingly, the combined Yahoo!-AOL deal would be closer to $31.27 per share - with AOL on Google's platform - slightly north of the original offer from Microsoft. Of concern for current Yahoo! shareholders is that the terms of the AOL deal call for Yahoo! to buy back shares somewhere in the $30-40 per share range. Even with the $31 a share purchase price, the AOL dance may end up costing existing shareholders when, and if, any deal is made in the lower $30s.

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