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Microsoft issues 3-week deadline to Yahoo

updated 11:35 pm EDT, Sat April 5, 2008

Microsoft 3 Wk Yahoo

Microsoft on Saturday applied pressure to Yahoo by submitting a letter directly to the search engine firm's board of directors, setting a deadline for the company to accept Microsoft's $31 per share takeover offer. Citing deteriorating economic conditions, the Redmond, Washington-based Microsoft refused to increase its bid and gave Yahoo a total of three weeks to accept the $44.6 billion bid as originally made in late January before it would be "compelled" to bypass the board and bring a lower-priced offer directly to Yahoo's shareholders. This will include launching a proxy battle by stepping up pressure to elect a more takeover-friendly board of directors at Yahoo, Microsoft said.

"If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo! board," the letter read. "The substantial premium reflected in our initial proposal anticipated a friendly transaction with you. If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company from our perspective which will be reflected in the terms of our proposal."

The letter also claims that Yahoo's value has been damaged in the weeks since the original bid, with the combination of a poor US economy and disappointing results at Yahoo itself diminishing the company's worth. Microsoft also accuses Yahoo of making strategic changes that would sour the potential deal and argues that the northern California company should be appreciative of the bid originally made rather than attempting to force a higher bid.

"By any fair measure, the large premium we offered in January is even more significant today," Microsoft CEO Steve Ballmer said in its letter. "We believe that the majority of your shareholders share this assessment, even after reviewing your public disclosures relating to your future prospects."

Microsoft's communication emphasizes a split between its perception of the deal and Yahoo's reaction, with Microsoft today claiming that its offer assumed a "friendly" response while sources have suggested that the takeover offer fulfilled a threat to take the matter public when Yahoo repeatedly refused to accept Microsoft's terms, which were considered unsolicited by Yahoo. The latter is said to have explored several different alternatives to accepting Microsoft's offer, including potential deals with AOL, News Corp., and other organizations.

Some Yahoo contingents are known to support Microsoft's proposal and are considered the most likely to vote in a new directorial board, including two retirement groups that have filed lawsuits against Yahoo for its decision.




by MacNN Staff

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Comments

  1. bloodline

    Joined: Dec 1969

    0

    Ha!

    Looks like the Yahoo board were right! M$ really want to buy Yahoo and will stop at nothing to get it... If the share holders hold out they will make a fortune!

    It's really funny, that a document so aggressive in tone has actually just shown their hand! Ballmer is a Lame business man... Gates would never have let the cat out of the bag like this!

  1. zaghahzag

    Joined: Dec 1969

    0

    yeah seriously

    let us buy you or else we'll offer you less money. That doesn't seem like a good negotiating tactic.

  1. Feathers

    Joined: Dec 1969

    0

    the end of ethics...

    Incredible that "..sell us your company or we'll take it by force..." barely raises an eyebrow. Proof if proof were needed that the DOJ should have broken M$ up into smaller companies years ago. Too late now!

  1. Beechlady

    Joined: Dec 1969

    0

    All the more reason

    to hate Mico-is-soft......Typical Ballmer and Gates. Oh, but yeah, Bill is "helping" the poor, so that makes it O.K......

    Why don't you guys worry about fixing Vista first?

  1. Haroscarfel

    Joined: Dec 1969

    0

    dictator

    i cant believe people still support a company that is blatantly bullying like this. good old mikro$oft. this really shows the peecee mentality as also seen with Dell's " what if remarks" about buying apple. makes me hold tight to my mac even if apple experienced another dark time.

  1. that one guy

    Joined: Dec 1969

    0

    In other words...

    If Yahoo does not accept this deal, Balmer will be back with Chairs. He's not afraid to use them folks.

  1. Durandalus

    Joined: Dec 1969

    0

    Bad News for Yahoo

    MS has some experience in buying public votes. (OOXML ISO votings)

  1. ZinkDifferent

    Joined: Dec 1969

    0

    gasps!

    "The solution currently implemented for the problem will bear a strong resemblance to Apple's Classic implementation for Mac OS X."

    No, really...??!??!!

  1. climacs

    Joined: Dec 1969

    0

    wtf?

    who ever heard of a negotiating ploy that goes like this:

    "I'll offer you $100 for your widget!"

    "It's not for sale, at any price!"

    "OK, how about $80?"

    Seriously... is there something I don't get here or is Ballmer an idiot? Because that is how it seems this boils down to.

  1. climacs

    Joined: Dec 1969

    0

    i think

    this is simply Ballmer's tactic to get the board to accept his current bid... "take it now; I won't offer as much if I have to go around you; really, this is the best deal you're going to get!"

    But this tactic can only succeed if Yahoo caves to Ballmer's bluster. If they still turn him down, I can't imagine a single shareholder who would accept LESS than MS' current offer. Neither the economy nor Yahoo is in a significantly worse position than when the offer was first made.

    Ballmer is full of s*** and his hardball tactics are going to backfire, big-time.

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