Monday morning came with an answer from Yahoo to Microsoft on its proposed buyout offer - that answer was “No”. It wasn’t a “No, thank you” either, but rather more of a “No, your offer insulted us”.
Depending on how you read Yahoo’s official press release, its press release on the offer can be taken to mean that Yahoo is either looking for more money from Microsoft or that it is going to go with a strategic alliance rather than be bought.
The official language of the press release states that:
“After careful evaluation, the Board believes that Microsoft’s proposal substantially undervalues Yahoo including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments. The Board of Directors is continually evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximize value for all stockholders.”
Last week we spoke of alternative ideas for Yahoo beyond the Microsoft deal or a partnership with Yahoo - this weekend brought one with word that Yahoo is once again exploring the option of a merger with AOL (the two sides formerly discussed this in 2006). While many on the Internet were quick to point out that such a deal may actually be worse than the Microsoft one, it would allow Yahoo to remain independent, which it appears they are very much in favor of.
The big question now is what Microsoft’s response will be. Despite some rather cordial messages that came out of Microsoft last week towards Yahoo exalting how great the two companies would be together, this is still very much a hostile takeover attempt.
Reading The New York Times piece on the man behind this deal, Microsoft chief financial officer Christopher Liddell, it certainly appears that he is ready to go very hostile on this bid and either take it to the Yahoo shareholders directly or possibly even move to install pro-merger members on Yahoo’s Board (yes, they can potentially do that).
As always, watch for the role Google plays as this unfolds - especially with any AOL partnership talks. They do own 5% of that company.
One Comment
-
Curt Monash said:
We’re at the stage of the negotiation where both sides document their “threat points.” It’s all standard stuff.
http://www.texttechnologies.com/2008/02/08/a-game-theorists-view-of-microsoftyahoo/
CAM
7 Trackbacks
3:14 pm
A life in the River - February 11, 2008 | Athow.com: Internet, Media and Technology at its fullest said:
[...] 4:15 PM MG Siegler / VentureBeat: Yahoo rejects Microsoft’s proposal, more money or new offers welcome [...]
10:07 pm
Rumor roundup: Everyone is buying everyone » VentureBeat said:
[...] We went into the end of last week hearing first that Yahoo would make a decision on the how to respond to the Microsoft offer at their board meeting on Friday. Then word was that they would not decide until the following week what to do. By Saturday this had once again switched back to Yahoo having made a firm decision and would reject Microsoft’s offer formally on Monday (our coverage). [...]
10:48 am
Yahoo: Never mind the bollocks, here’s the numbers » VentureBeat said:
[...] continues to make its case for why it shouldn’t be bought by Microsoft (our coverage). On Tuesday the company unveiled numbers suggesting a very rosy outlook for the companies [...]
11:19 am
Microsoft prepared to dig in and wait as Russian winter closes in on Yahoo » VentureBeat said:
[...] Yahoo rejected Microsoft’s offer in early February (our coverage), talk began to circulate that Microsoft would come back with a sweeter deal. While the initial [...]
12:09 am
Formal letter wars: Yahoo to respond to Microsoft » VentureBeat said:
[...] On Saturday, Microsoft issued a letter demanding that Yahoo begin formal talks about the initial acquisition offer (our coverage). Failure to comply would result in the deal being taken directly to Yahoo’s shareholders at a reduced value. Tomorrow, Yahoo is expected to issue a letter in response with a similar refrain to its last letter to Microsoft (when it initially rejected the acquisition offer): You undervalue us. Yahoo is not opposed to a deal but wants Microsoft to make a better offer, a source tells Reuters. This kind of talk surrounded the initial offer as well (our coverage). [...]
11:10 am
Icahn haz Yahoo? A true shark moves in… » VentureBeat said:
[...] feels (and states that his fellow shareholders feel) that Yahoo was simply wrong to reject Microsoft’s initial offer of $31-a-share when the company was trading at the time in the [...]
8:46 pm
Google Ads to Appear on Yahoo’s Pages — Gfanatic said:
[...] So, what about the revenues Yahoo will be getting from running Google AdSense? Well, they are going to use it for improving their search engine. A clever move eh, after dumping Microsoft’s acquisition offer? [...]