Microsoft likely to go into debt for Yahoo deal
Microsoft has historically been renowned for its huge cash holdings, and its ability to avoid going into debt, but the company will probably need to borrow for the first time to help cover the cash portion of its giant Yahoo bid. That detail was revealed just now by Chris Liddell, the company’s chief financial officer, during a presentation to Wall Street analysts.
Liddell didn’t say how much Microsoft would borrow. The company had $21 billion in cash and short-term investments as of Dec. 31 — significantly less than in the past, following a series of share buybacks and other initiatives that have reduced the company’s cash holdings. Microsoft is offering $31 per share for Yahoo, or more than $40 billion. The company says it will pay half in cash and half in stock if its bid is successful.
“If you look at the cash component rather than focus on the stock component, that’s going to be over $20 billion worth of cash,” Liddell said. “We could fund most of that through our cash holdings, but it’s likely we’re actually going to borrow for the first time.” He said it would be a mixture of the cash the company has on hand plus debt.
In comparison, Apple has $18.4 billion in cash with no debt.
