Microsoft will pay big for Yahoo! Solar Power heats up while General Motors loves China long-time

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Microsoft to pay a 75% premium for Yahoo!

It has been a week to write home about for Yahoo! after a very strong recommendation from Bear Stearns Analyst Robert Peck and confident predictions that its stock could hit $30. Now, things are definitely heating up as the rumours continue to mount that Microsoft is preparing a bid to purchase Yahoo! outright. A very enlightening post from Eric Savitz at Seeking Alpha’s Internet Stock Blog stated that current market trends for acquisitions in the Internet space would see Microsoft paying a 75% premium for Yahoo! shares. Savitz stated that “Internet acquisitions have been happening at 19x-20x EBITDA over the past three years, and that an acquisition of Yahoo at that level would bring the price tag to $40, or about a 75% premium from Friday’s close.”

Paying a high premium has not deterred Microsoft from past acquisitions. During the purchase of aQuantive, Microsoft paid an 85% premium for the adserving firm. Savitz states that even with a 75% premium, Yahoo!’s total sale price would come in at around 67 billion dollars- money Microsoft seems to have since it has been reportedly sniffing around Research in Motion; also valued around the 60 million dollar mark. Whatever Microsoft’s course of action, Savitz recommended that they watch their step. Microsoft doesn’t have an extensive track record with large-scale acquisitions, he noted “aside from the $6 billion aQuantive deal, which came amid a feeding frenzy for Web advertising plays, the company has never bought anything for more than $1 billion.”

Too many Chinese IPO’s- not enough investors

The New York Times Dealbook Blog is reporting that a glut of IPO activity from big banks and state-owned companies is creating a problem on the Shanghai Exchange “Chinese stocks fell Tuesday after posting a record high as fears emerged that new share offerings by banks and other big state companies might outpace demand.”

Currently, the Shanghai index as well as the Shenzen composite, are expecting initial public offerings from PetroChina Company, China Shenhua Energy, China Mobile and the Bank of Beijing. Additionally, the massive offering of China Construction Bank could be approved on Friday which would see “possibly 9 billion shares the bank plans to sell in Shanghai, it could raise nearly $7.9 billion, the most ever for a public offering on a bourse in China.”

Solar Power is heating up as VC’s rush to pour cash into Cleantech

VentureBeat, an expert blog focusing on financing and venture capital, put together an intriguing post outlining the recent rush on financing start-ups focused on solar power. Three relatively unknown companies have received funding during the past several weeks, among them is Sierra Nevada Solar. Matt Marshall, the blog’s author, wrote that “regulatory filings show it has raised $4.5 million in a first round of funding, according to PE Wire.” Marshall also mentioned some growing investor excitement over a new venture from MIT focused on “bio-solar cells.” These new solar cells will supposedly “isolate light-harvesting molecules called chlorophyll from extremophile bacteria” and turn it into power. Marshall reports that while specific details are sketchy, at best, a patent has been filed.

The same post also mentions that the growing prominence of cleantech has been making these start-ups worth more in the past few months and years. So many companies want to invest in efficient technology, but the lack of suitable investment targets has been driving up valuations. Marshall stated that “there aren’t enough companies to satisfy soak up the capital investors want to pump into them.” More specifically, he pointed to a study from New Energy Finance that stated “last year, venture capitalists invested only 73 percent of the total money available to them for clean energy companies, with $2 billion residing in funds and waiting to be invested.”

China is becoming a hedge for GM’s falling domestic sales

A post from 24/7 Wall Street revealed some details about the Chinese market for automobiles and General Motors market share within it. According to the post, written by Douglas A McIntyre, “the Chinese market will buy 8.5 million new cars this year.” Of that, GM’s share is roughly 12% which would mean that GM has sold more than a million cars in China this year alone. The post also reports that these gains come amidst declining automobile prices in China due to demand.

McIntyre declares that “China is becoming a hedge for falling domestic sales.”  He also notes that GM’s market share in South America is growing as well. McIntyre was definitely confident that “If the company can hold market share here (China), its global business could rebound strongly.”

Interestingly enough, GM was the only domestic car maker who experienced a boost in sales during the month of August.

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