A Tale of Two Botched Buyouts

Sure, fresh episodes of scripted TV shows are finally returning to prime time. But in my opinion, there's no entertainment quite as exciting -- or at times hilarious -- as a pair of hostile buyout proposals reaching meaty milestones this month.

Between Electronic Arts' (Nasdaq: ERTS  ) $26-a-share unsolicited bid for Take-Two Interactive (Nasdaq: TTWO  ) , and Microsoft's (Nasdaq: MSFT  ) stalemate volley for Yahoo! (Nasdaq: YHOO  ) , you have enough action-packed adventure to keep your TV dark for the rest of the month.

Both cases find the companies eyeing events coming up later this month. Take-Two is refusing to consider a buyout bid until the April 29 release of "Grand Theft Auto IV." Yahoo! is heading into its April 22 quarterly earnings report with great trepidation.

The pressure is on for the acquirers. Can EA raise its bid enough to appease Take-Two? If it waits too long, and "GTA IV" lives up to its monster billing, EA may never stand a chance to hook up with the smaller video game publisher. Even if it does, another fat potential bidder like Activision (Nasdaq: ATVI  ) or Viacom (NYSE: VIA  ) might cut in for a dance.

Microsoft is under pressure, too. The longer it holds off on either upping the ante, lowering its bid, or walking away from the table, the longer that Microsoft shareholders will suffer, as the potential of a dilutive acquisition weighs down their stock. Surprisingly strong earnings from Yahoo! may also spur Microsoft to raise its offer or abandon its pursuit.

You may not even have to wait until April 22 for that. Yahoo! rival Google (Nasdaq: GOOG  ) reports five days earlier. Since most metrics point to Yahoo! losing market share to Google during the quarter, a lukewarm report from Google could warn of a disastrous one from Yahoo!

Even if Google posts great results, Yahoo! still can't win. The market will wonder whether Google's strength is once again coming at a fading Yahoo!'s expense.

So maybe the pressure is more on Yahoo! than Microsoft to seal the deal. Microsoft hasn't upped its offer since making its initial unsolicited bid more than two months ago, and that won't change yet. After holding out this long, I doubt Microsoft will cave in just before a report that might drive Yahoo!'s acceptable buyout price even lower.

Even if Yahoo! reports earnings through the roof, no one is likely to bid higher for it than Microsoft. In fact, a good report may help placate Microsoft investors, who have seen their stock fall under the assumption that Microsoft is overpaying for a company in decline.

So you see why I'm glued to the set? This foursome is my Final Four. These are my "Desperate Housewives." Pick up on the nuances, the body language, and the clocks ticking deliciously down to late April, and maybe you'll appreciate the drama, too.


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