Companies Explore Merger Possibilities To Counteract Economic Crisis

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Google has withdrawn from a planned advertising deal with Yahoo, due to resistance from clients and regulators. This fueled speculation that Yahoo may be an acquisition target. During a technology conference in San Francisco on Wednesday, Yahoo CEO Jerry Yang reportedly said that he was “very open minded” with regard to a full or partial merger with Microsoft Corporation. In May this year, Microsoft pulled out of a bid for Yahoo, which at the time offered as much as $33 per share. Since May Yahoo’s share price has suffered and investors are anxious for Yahoo to reconsider some sort of deal. Analysts are doubtful that Microsoft would enter into a full merger deal, but believe that a deal for Yahoo’s online search business is very possible.

Following the refusal by the Bush administration to assist in the proposed General Motors-Chrysler merger, automakers are hopeful that Barack Obama will be more sympathetic to the dilemma they are in. Economists believe that the collapse of the U.S. auto manufacturing industry would crush the U.S. economy. October statistics revealed that the U.S. auto market dropped to levels not seen in 17 years, lending a renewed sense of urgency to the issue. During his campaign, Obama assured auto industry leaders and the United Auto Workers that he understood their problems and would make preserving the industry a priority. The urgency of the situation is not exaggerated as statistics show that if all three major auto manufacturers, General Motors, Ford and Chrysler, should shut down, more than three million people would lose their jobs. The question remains as to whether automakers can hold out until January, when Obama takes office, or will he be able to make funds available through a lame-duck U.S. Congress.

Other merger-related news is that Scottsdale-based supply-chain management software provider, JDA Software Group Inc. (Nasdaq: JDAS) earlier in the week revealed its intentions to acquire Dallas-based i2 Technologies Inc. (Nasdaq: ITWO) with the original agreement stipulating a cash price of $14.86 per share for each of i2’s common stock. However, while acknowledging that the merger with i2 would provide strategic benefits, JDA CEO Hamish Brewer noted that the current credit market and economic environment had negatively impacted on plans to close the acquisition this week. JDA had asked i2 to delay their planned November 6 shareholder meeting, in order to negotiate a lower selling price. Nevertheless, i2 went ahead with the meeting and received stockholders approval for the merger, with the number of shares in favor representing more than 80 percent of total outstanding shares. After the stockholders meeting i2 received a written proposal from JDA in connection with amending the common share price. Having reviewed JDA’s proposal, i2’s board of directors concluded that it would not be in the interest of their stockholders to pursue the proposal. In terms of the original agreement, i2 has fulfilled all of its conditions to closing the merger and anticipate that JDA will fulfill its side of the agreement. Should they not do so, i2 reserves its right to pursue a termination fee. The merged companies would hold a significant share of supply-chain management across a wide cross-section of industries.

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