Google to Finance Cash for Yahoo Buy

Google Inc is considering to provide financing for acquisition of Yahoo Inc by another company or a group of bidders, according to a person briefed on the matter. The company may opt not to take active part in any offer and hasn’t engaged in serious discussions with would-be partners, said the person, who asked not to be identified because the deliberations are private.

Google in a strategic position over Yahoo

Yahoo is weighing strategic options after firing former Chief Executive Officer Carol Bartz, in part for her failure to keep pace with Google in the online advertising market. Greg Sterling, an analyst at Opus Research in San Fransisco said –

Google, which is under regulatory scrutiny from governments around the world, may lend its financial support to preserve Yahoo as a rival and bolster competition in the Internet industry. If competition dissipates or diminishes, then the hand of regulators is strengthened. Whereas, if Competition is diminished or marginalized, then all the arguments about Google being a monopoly ring more true.

Potential financing by Google for a bid for rival Yahoo has parallels with the $150 million investment that Microsoft Corp made in competitor Apple Inc in 1997 to help preserve competition in the computer market .

Google Cash Strength

Google, which has $42.6 billion in cash and short-term investments, is considering helping finance other bidders, rather than trying to acquire Yahoo outright, the person said.

Regulators might scrutinize any Yahoo acquisition effort that involves Google. The US Government threatened to challenge an earlier proposal by Google to place ads on Yahoo site, causing Google to abandon the effort in 2008. A growing roaster of PE firms is considering whether to pursue Yahoo, which has a market value of $20.35 billion.

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