Yahoo Inc.'s board will reject Microsoft Corp.'s $44.6 billion takeover bid after concluding the unsolicited offer undervalues the slumping Internet pioneer, according to a person familiar with the situation. The decision could provoke a showdown between two of the world's most prominent technology companies. If the world's largest software maker wants Yahoo badly enough, Microsoft could try to override Yahoo's board by taking its offer—originally valued at $31 per share—directly to the shareholders. Pursuing that risky route probably will require Microsoft to attempt to oust Yahoo's current 10-member board.
Alternatively, Microsoft could sweeten its bid. Many analysts believe Microsoft is prepared to offer as much as $35 per share for Yahoo, which still boasts one of the Internet's largest audiences and most powerful advertising vehicles despite a prolonged slump that has hammered its stock. Yahoo's board reached the decision after exploring a wide variety of alternatives during the past week, according to the person who spoke to The Associated Press. The person didn't want to be identified because the reasons for Yahoo's rebuff won't be officially spelled out until Monday morning.
Microsoft and Yahoo declined to comment Saturday on the decision, first reported by The Wall Street Journal on its Web site. Yahoo's board concluded Microsoft's offer is inadequate even though the company couldn't find any other potential bidders willing to offer a higher price. By spurning Microsoft, Yahoo risks further alienating shareholders already upset about management missteps that have led to five consecutive quarters of declining profits. The downturn caused Yahoo's stock price to plummet by more than 40 percent, erasing about $20 billion in shareholder wealth, in the three months leading up to Microsoft's bid.
Yahoo now may want that Microsoft to raise its price to at least $40 per share again. That would force Microsoft to raise its current offer by about $12 billion—a high price that might alarm its own shareholders. Microsoft's stock price already has slid 12 percent since the company announced its Yahoo bid, reflecting concerns about the deal bogging down amid potential management distractions, sagging employee morale and other headaches that frequently arise when two big companies are combined.
I don't see what long term benefit MS can gain from Yahoo either. Users are just going to leave if MS tries any strong arm tactics.
I don't see what long term benefit MS can gain from Yahoo either. Users are just going to leave if MS tries any strong arm tactics.
Yahoo is the second most used search engine
I don't see what long term benefit MS can gain from Yahoo either. Users are just going to leave if MS tries any strong arm tactics.
Most users dont care who owns what, they use what works for them, if yahoo still works for them they will still use it, half them woudlnt even be aware of the tactics MS uses..... i doubt they would loose that many users, you assume most users have a clue, i can tell you from expierience most users dont have a clue... and there are defintaly huge long term benefits for MS.
With a little persistence, Yahoo will probably give it up on the second or third date. This isn't done yet.
Yahoo! is insane.
Although, I agree that this probably isn't over yet.
lol
Hey, way to show your illiteracy! Your mother would be proud.
Yahoo will reject the initial offer, flirt around a bit; and then maybe when MS re-submits a fresh offer, consider it favourably ......
Hell, if I was a Yahoo shareholder I'd be looking at ousting the board at the 1st chance or better yet, getting that 60% premium per a share.
I look at it like the corporate executive who loses his job and then is "too good" to accept a lower paying job, not realizing that his excessive salary makes it hard for any company to hire him.
The thing about selling something is that you can state what it is worth until you are blue in the face, but in the end, it is only worth what someone is willing to pay for it.
Intresting to see what the response from MS is...
-Spenser
Though I personally think it would be better if Yahoo! chose Google (though I guess it's impossible due to American anti-monopolistic laws)
The only "choice" here IMHO is continued business (with MS buyout) or eventual failure.
This is going to do more damage for Yahoo! As soon as they announce they are rejecting the bid from MS their share price will fall, lowering the value of the company further! I don't think MS wants them THAT badly to offer an insane amount of money!!
The SOLE PURPOSE of business is to maximise shareholder wealth, which the offer will clearly do in the short and the long term!!!!
Commenting has either been disabled on this article or you are not logged in. Click here to login or register, its free!
Note: Anonymous commenting is disabled in order to keep the quality of responses to a high standard.