The new search advertising deal between Yahoo Inc and Google Inc is unlikely to win US antitrust approval, and therefore may open the door to a new bid for Yahoo from Microsoft Corp, an analyst said.
Under the revised deal the two companies have proposed to the Justice Department, Yahoo and Google significantly scaled back the scope of their agreement, including shortening the length of the partnership to two years from 10.
Sanford Bernstein analyst Jeffrey Lindsay called the revised offer a "desperate gambit." He said in a note that he expected the Justice Department to defer a decision until next year, and expects the agreement to eventually fall apart.
Should that happen, Microsoft might renew its effort for Yahoo with an offer of around $20 a share, Lindsay said. Microsoft had offered as much as $33 per share for Yahoo earlier this year.
"We expect the DoJ to defer a decision to next year and believe they are preparing for an antitrust showdown with Google," Lindsay wrote. "We expect the Google-Yahoo deal to founder, leaving Yahoo unable to acquire AOL's portal and stuck in a stand-alone value trap."
Yahoo has been in talks with Time Warner Inc about the advertising and content assets of AOL.
Shares of Yahoo rose 4.71% to close at $13.35, while Google shares climbed 5.9% to $366.94. Microsoft added 4.02% at $23.53 on Nasdaq.
