A New Meaning For 'Unbanked'
Why hire a team of high-priced investment bankers if you aren't going to use them?
You might pose that question to Microsoft and Yahoo. The two companies met on Monday to discuss Microsoft's vision for its proposed bid. But there were no bankers in attendance.
On the face of it, the exclusion of the bankers seems odd. Since Microsoft announced its unsolicited bid for Yahoo in January, the two companies assembled teams of top investment bankers, including Jill Greenthal of Blackstone Group and Paul Taubman of Morgan Stanley on the Microsoft side and Janine Shelffo of Lehman Brothers working with Goldman Sachs Group and Moelis & Co. on behalf of Yahoo.
So why did Microsoft and Yahoo keep out all the high-priced, presumably well-prepared bankers when the companies had their first talks since Jan. 31?
It could be seen as a sign of a kinder, gentler, less-impetuous Microsoft that is thinking ahead and trying to win over Yahoo management. The absence of bankers from the meeting seems to indicate that Microsoft wants to start a charm offensive and get to know Yahoo without the anvil of the bid hanging over the two parties.
There are good reasons for Microsoft to soften its approach, the biggest one among them being price. Yahoo will resist a deal until there is a higher price. Microsoft won't sweeten its bid until Yahoo opens its books. And Yahoo won't open its books to people it doesn't like. If Microsoft can humanize its approach and look less like the big bad wolf, the software company presumably will get better cooperation from Yahoo and ease the way for a deal. Not incidentally, it also might stop the massacre in the value of Microsoft's shares, which have fallen 20% since December.
Any of those reasons would bode well for a deal to actually materialize. But there is one thing to keep in mind: The bankers get paid even if they aren't in the room.By: Heidi Moore
Wall Street Journal; March 15, 2008
March 15, 2008; Page B4
