TEXT OF INTERVIEW
Scott Jagow: Yahoo and Microsoft are back to flirting.
They’re not talking about a full-blown marriage this time — just a casual partnership in online searches and advertising. The buyout is off the table for the moment, to the dismay of many Yahoo shareholders. But not all.
Allan Sloan — you say in deals like this, shareholders usually fall into two camps. What do you mean?
Allan Sloan: Well, when some offer has surfaced, many of the big shareholders of the company — that’s what we call in the trade the target — have to decide whether they want to hold the stock to see if the deal goes through or whether they want to sell it in the market and let someone else, known in the trade as a risk arbitrage, take the risk.
Jagow: But in this case, the deal fell through. So what happened?
Sloan: The stock had been 19 before Microsoft appeared, so a lot of players took their 50 percent windfall — you go from 19 to 28 — and had given the risk to the buyers, and they really got whacked when Microsoft originally called off the deal. The price of Yahoo fell rather sharply. Then, they complained publicly about Yahoo — which I thought was really sort of childish, because they could have sold their stock.
Jagow: Well Allan, are you a patient type investor, or are you an arbitrage?
Sloan: These days, I’m patient, with a little . . . of arb. Because again, I happen to own Wrigley stock — and Wrigley, I’ve owned it for years and years and years — and as you may or may not know, Wrigley was dragging along in the 60’s, and an offer came for 80 from the Mars family and Warren Buffet — and the stock shot up. You know, it’s very, very high, in the high 70’s, so I have a question of whether or not to sell into the market in the 70’s or to wait for my 80. And I’ve pretty much chosen to wait for my 80, because I think it’s, you know, a reasonably certain thing to happen. Now, if it turns out the deal breaks up and the stock goes back to 60, you’ll hear me sobbing, but you won’t hear me whining.
Jagow: All right, Allan Sloan from Fortune Magazine. Thank you.
Sloan: You’re welcome.
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