Friday’s news of Microsoft’s (MSFT) $44.6 billion bid for Yahoo (YHOO) has driven up share prices could affect related internet exchange traded funds (ETFs) heavily weighted in the companies.

Yahoo’s prices went up to $28.68 per share, a 52% jump from $18.87 per share on Thursday’s close. Hannah Glover for Ignites says that Monday represented another 3.35% increase to $29.33 per share. If the deal were to close as proposed, Microsoft would buy Yahoo for cash and stock at $31 per share.

Insiders feel that Yahoo will have a hard time turning down this offer, as mediocre earnings reports from the company came out and it never fully recovered from the dot-com crash. If they team up, Yahoo  and Microsoft want to give Google (GOOG) a run for the search engine and online advertising market share.

Related ETFs:

  • Internet HOLDRs (HHH): Yahoo is 20.4% of the fund.
  • First Trust Dow Jones Index (FDN): Yahoo is 9.9%; Google is 10%.
  • Technology Select Sector SPDR (XLK): Microsoft is 10.8%; Google is 6.1% and Yahoo is 1.2%.
  • iShares Dow Jones US Technology (IYW): Microsoft is 13%; Google is 7.1% and Yahoo is 1.3%.

So far, only HHH is up since the Feb. 1 announcement, by 0.4%. The other three funds are down slightly. Keep an eye on them as this news progresses.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.