The Hindustan Times is reporting that Yahoo! (YHOO) and Google (GOOG) may be making bids for Indian web portal Rediff (REDF). The price would be as high as $1 billion. The news comes at the same time that Barron’s warns that the price of Indian net companies may becoming much too high. The magazine says that Rediff’s market cap is 13X the size of the entire online ad market in the country.
But, Google and Yahoo! may feel that they cannot afford to make the same mistake that they did in China where market leader Baidu (BIDU) has taken a significant lead, especially in the search area. Both of the US companies have tried to take share from Baidu, but without any success.
As in other bidding for new business, Google has the advantage that its earnings are less likely to be diluted because they are so much larger than Yahoo!’s. Also Google has more "capital" with a market cap of $172 billion compared to Yahoo! at $36 billion.
No one should be surprised it Google buy Rediff. It makes too much sense.
Douglas A. McIntyre
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