Are Microsoft and Yahoo going to merge and what will happen to the stock if they do?

Question

Are Microsoft and Yahoo going to merge and what will happen to the stock if they do?

Answer 1

<<<are Microsoft and Yahoo going to merge>>>

That is asking what will happen in the future. No one knows for sure. My guess is that they will not merge, but there are a lot of people on both sides.

<<<what will happen to the stock if they do?>>>

Again that is asking about what will happen in the future, so once again no one knows for sure. If a merger occurs in the near future it appears most likely that MSFT will be taking over YHOO. In order to get YHOO shareholders to sell their shares, MSFT would have to pay more than the current market price per share. That would normally drive the price of YHOO stock up until the merger actually took place, at which time YHOO stock would no longer exist. The impact on the price of MSFT stock is less certain. Quite often the "market" does not like the fact that an acquiring company is paying more than the market price to buy shares, and the stock of the acquiring company goes down. However, in some cases the two merged companies are seen as fitting together so well that the price of the acquiring company actually goes up.

My guess is that the price of MSFT would go down, at least temporarily, but that is only a guess.