Nothing crushes a pending business deal faster than the threat of a lawsuit. And that’s just what happened between some time yesterday and some time today regarding the Google Inc.-Yahoo! Inc. ad outsourcing partnership. Because, yesterday, the deal was still on, with revisions.
But Google (GOOG) has ended the transaction because the Justice Department wouldn’t approve it as-is and legal action was in the works.
“This represents the first time to our knowledge that Google has bumped up against a situation where the government would not allow it to pursue a business venture, and as such is nevertheless not a welcome outcome,” wrote telecom analysts for investment bank Stifel Nicolaus in a Nov. 5 client memo.
They added: “We believe the deal has always been much more critical for Yahoo! (YHOO), which has struggled with a strategy for its future. We would not be surprised to see Yahoo! shareholders press for an arrangement of some sort with Microsoft. We note that whatever the terms of any deal, it would be reviewed under a Democratic DOJ, and would likely receive careful scrutiny.”
