Spring Break
Yahoo rejects bid, but deal seen as inevitable
Feb. 12, 2008
Elise Ackerman and Pete Carey - San Jose Mercury NewsIssue date: 2/7/08 Section: MCT News
SAN JOSE, Calif. _ Microsoft's bid for Yahoo took on the air of inevitability Monday, even as the Sunnyvale search firm's board of directors officially rejected the offer.
That decision, first reported over the weekend, was widely viewed on Wall Street as an effort to get Microsoft to raise its $44.6 billion, or $31 per share, proposal _ or at the very least give Yahoo time to look at other options. Yahoo's stock rose 2 percent in regular trading to close at $29.87, up 67 cents.
"It's good negotiating tactics to try to get a higher price from Microsoft," said Laura Martin with Soleil Securities Group. "But if they really reject the offer they are going to have a litany of shareholder lawsuits. It's clear there are no other bidders for anything close to this price."
In the coming weeks, Microsoft will try to raise the pressure on Yahoo. It has indicated it is prepared for a nasty takeover battle that could include nominating its own slate to Yahoo's board of directors or making its offer directly to Yahoo's shareholders.
Meanwhile Yahoo, which began laying off 1,000 employees this week, will continue scrambling for an alternative that would enable it to survive as an independent company. It is considering everything from outsourcing search advertising to Google to making its own bid for AOL.
In the end, tens of billions of dollars are betting that Microsoft and Yahoo will find common ground somewhere between the $31 per share that Microsoft offered on Feb. 1 and $35 per share, which analysts believe Microsoft could afford to pay.
Yahoo and Microsoft issued dueling statements that veterans of corporate takeover battles said were full of code words indicating Yahoo was willing to sell at the right price.
Yahoo said Microsoft's proposal was "not in the best interests of Yahoo shareholders" and "substantially undervalues" Yahoo's assets, including its brand and large worldwide audience.
"We remain committed to pursuing initiatives that maximize value for all shareholders," Yahoo's release stated.
That decision, first reported over the weekend, was widely viewed on Wall Street as an effort to get Microsoft to raise its $44.6 billion, or $31 per share, proposal _ or at the very least give Yahoo time to look at other options. Yahoo's stock rose 2 percent in regular trading to close at $29.87, up 67 cents.
"It's good negotiating tactics to try to get a higher price from Microsoft," said Laura Martin with Soleil Securities Group. "But if they really reject the offer they are going to have a litany of shareholder lawsuits. It's clear there are no other bidders for anything close to this price."
In the coming weeks, Microsoft will try to raise the pressure on Yahoo. It has indicated it is prepared for a nasty takeover battle that could include nominating its own slate to Yahoo's board of directors or making its offer directly to Yahoo's shareholders.
Meanwhile Yahoo, which began laying off 1,000 employees this week, will continue scrambling for an alternative that would enable it to survive as an independent company. It is considering everything from outsourcing search advertising to Google to making its own bid for AOL.
In the end, tens of billions of dollars are betting that Microsoft and Yahoo will find common ground somewhere between the $31 per share that Microsoft offered on Feb. 1 and $35 per share, which analysts believe Microsoft could afford to pay.
Yahoo and Microsoft issued dueling statements that veterans of corporate takeover battles said were full of code words indicating Yahoo was willing to sell at the right price.
Yahoo said Microsoft's proposal was "not in the best interests of Yahoo shareholders" and "substantially undervalues" Yahoo's assets, including its brand and large worldwide audience.
"We remain committed to pursuing initiatives that maximize value for all shareholders," Yahoo's release stated.
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