Yahoo Expected to Reject Microsoft’s Takeover Bid

[MrAlex]

Yahoo Expected to Reject Microsoft’s Takeover Bid

Yahoo’s board plans to reject Microsoft’s $44.6 billion hostile bid in a letter on Monday, saying the offer undervalues Yahoo, people involved in the discussions said Saturday.

Microsoft, which hopes Yahoo will help it compete more effectively against Google, is likely to continue its pursuit.

The decision to reject the offer was made after a board meeting Friday in which directors discussed ways the company might respond to Microsoft’s week-old bid. The board heard presentations from Yahoo’s management and its bankers, who made the case that the company was worth more than the $31 a share Microsoft offered, people familiar with the discussions said.

In response, Microsoft is likely to mount a behind-the-scenes campaign directed at Yahoo’s largest shareholders, hoping they will put pressure on Yahoo’s board, people familiar with Microsoft’s plans said. Hedge funds have bought up much of Yahoo’s stock since Microsoft made its bid, and they typically favor a quick sale as opposed to holding shares for the long term.

Microsoft could also decide to make an offer directly to shareholders, called a tender offer, which would put even more pressure on Yahoo’s board to negotiate. Microsoft could also set a deadline for its offer.

Microsoft has already intimated that it could seek to oust Yahoo’s board at its next election; it would have until March 13 to nominate a new slate of directors. Unlike other corporations, Yahoo has no protections to prevent an overthrow of its board.

Microsoft could also raise its offer to Yahoo’s board. It had planned to bid as much as $35 a share before Yahoo’s shares dropped to a three-year low last week, when it reported disappointing earnings.

Yahoo and Microsoft declined to comment Saturday. Yahoo said earlier in the week that its board was evaluating Microsoft’s offer and other options. The board’s decision to reject the bid was first reported on the Web site of The Wall Street Journal on Saturday.

Some **** said Yahoo’s rejection might simply be an attempt to get Microsoft to raise its bid.

At the Friday meeting, the Yahoo board also discussed options for maintaining the company’s independence, including an advertising partnership with Google that could improve Yahoo’s financial strength, people familiar with the discussions said.

Legal **** said the board’s deliberations were complicated by the fact that both of its most talked-about options could face antitrust objections. Google has already raised potential antitrust issues about a Microsoft-Yahoo tie-up. A Google-Yahoo partnership in search advertising could have “even bigger antitrust implications,” said Carl W. Tobias, a law professor at the University of Richmond in Virginia.

“It is a bit of a game and a gamble,” Mr. Tobias said. “Certainly a possibility is that the Google deal is being put forward to press Microsoft into offering more per share.”

No other offers to acquire Yahoo have surfaced, according to people familiar with the situation.

“They don’t have a whole lot of choices and a lot of defenses,” said Scott C. Dettmer, a veteran adviser to technology companies in Silicon Valley and a founding partner of the law firm Gunderson Dettmer Stough Villeneuve Franklin & Hachigian.

Some **** also noted that Microsoft’s initial offer, a mix of cash and stock, had already dropped in value as its shares have declined. It is worth about $29 a share based on Friday’s close.

Well, I thought they the would have probably accepted the offer, but apparently not >.<

What do you think's gonna happen?

[Tails5]

I think Microsoft will probably end up buying them for a value a bit closer to 60 billion.

[MrAlex]

I think Microsoft will probably end up buying them for a value a bit closer to 60 billion.

Well,
I don't think its about the money, (probably is ) but Yahoo!might not want to sell themselves, although I use Google (COZ IT PWNS) I think Yahoo! might want to stay by themselves. I mean what would happen to Yahoo! messenger? Will it combine with Windows Live Messenger!?

[Tails5]

Well, Yahoo is struggling right now. They're market share in the only thing they do is about 14%. Whereas Microsoft does have low market share in advertising/search engine markets. They have very high market share in other markets, such as the browser/operating system/gaming console markets.

[MrAlex]

Yes,
But it would be interesting to see what Microsoft would do with Yahoo!
And if they would keep the current people that are employed,
or fire them and get new people?

[Alwahsh]

I think they will never sell Yahoo! , it's a big website with many visitors and selling it means losing the effort of all years getting members .

[thetarget]

This deal is long gone.

But IMHO i think Yahoo! will be sold if the price is right.

Let's face it, at 1996, Yahoo!, though already successful, but still a service-oriented company. However, now Yahoo! is nothing other than a listed service-oriented corporation. The difference is that 12 years ago, Yahoo! still treat each and every user with respect and equal value, but now, it focus more on how to make money than how to improve customers' satisfaction and needs, and every user now has a price tag, so if you are low in their CRM (Customer Relationship Management), you are not going to be missed if you switch to other service providers.

The only reason for why Yahoo! still not sold is that it still has alot of potential in the internet, and the price Microsoft offered is far too low. You really think they will feel a pinch losing their 'big' website, visitors or their 'effort'?

Corporates are corporates <eol />