Microsoft-Yahoo buyout bid: The road ahead

Ready to pile in the car for The Road Ahead with Microsoft and its buyout bid for Yahoo?

We'll point out a few landmarks and potential detours to expect along the way in the coming days, weeks, and possibly months, and also take a brief glance in the rearview mirror to see where we've been.

Landmark 1: This weekend is the last weekend Yahoo and Microsoft will have to take advantage of a two-day stretch in which the markets are closed, before Microsoft slams up against a March 14 deadline to name its opposition slate to Yahoo's board.

Public companies in the merger mode tend to love weekends. It gives them two days to hammer out an agreement without fear that their stock price may go in gyrations should any information leak out prematurely. Often these companies will announce their deal before the markets open on Monday. Ever hear of Merger Mondays?

Obviously, there are plenty of exceptions. SAP, based in Germany, announced its $6.8 billion acquisition of Business Objects on a Sunday in October. And Microsoft announced its plans to buy Aquantive in a $6 billion deal on a Friday in May.

Landmark 2: By March 14, Microsoft must name its dissident slate of directors to Yahoo's board if it wants to go hostile and wage a proxy fight. Yahoo's full 10-member board is up for re-election at the next shareholders meeting, which currently is slated to occur sometime between May 18 and July 7.

Possible detours to the nomination deadline exist, however. The most obvious is Yahoo and Microsoft finally sit down and enter formal negotiations and a deal is struck before the March 14 deadline; or Yahoo takes it upon itself to extend that deadline.

Of course, Microsoft could wimp out and ultimately chose to forgo an opposition slate, even though it has no Yahoo deal in hand. Remember the Vista upgrade program and related e-mails.

Landmark 3: A war of words typically accompanies any proxy fight, so one could expect to see the same should Microsoft move forward with its opposition slate. The gamut runs from full-page ads in the national press to oodles of press releases to investor road shows with the candidates by both parties.

For a glimpse of things that may come, history serves as a guidepost. Take a look at Oracle's drawn out fight for PeopleSoft to billionaire investor Carl Icahn's push to unseat Motorola's board members.

Landmark 4: An exchange offer from Microsoft would likely be added to its proxy fight and rolled out sometime between its opposition slate being introduced and before the shareholders meeting. An exchange offer would state a per share buyout price for Yahoo and ask Yahoo investors to park their shares with Microsoft, until the stock could be tendered.

Microsoft could use an exchange offer to prove its buyout bid is "real," and give Yahoo investors something tangible to hold onto if they elect Microsoft's opposition slate of directors. And as more Yahoo investors sign on board with the exchange offer, expect the software giant to trot out that number, in an effort to pressure Yahoo to the negotiating table.

If a majority of Yahoo shares are exchanged, the Internet search pioneer likely would have a keen sense that its directors may not fair well in a re-election. Possible detour--Yahoo may formally engage in buyout talks with Microsoft, prior to the shareholders meeting.

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Microsoft's big bid for Yahoo

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Landmark 5: Currently, sometime between May 18 to July 7, Yahoo is planning to hold its annual shareholders meeting, according to its SEC filing. Last year, the company held its annual shareholders meeting on June 12.

Landmark 6: Post-shareholders meeting, assuming the parties didn't strike a deal and Microsoft's opposition slate was elected with control on the 10-member board, the new Yahoo board could vote to accept the buyout offer and rescind the shareholder rights plan, otherwise known as a "poison pill." Or, the new board could take a pass on formally accepting the buyout offer, but vote to rescind the pill, thereby allowing Yahoo investors to tender their shares to Microsoft.

Landmark 7: Proxy solicitors say once a dissident slate is elected, efforts to rescind the poison pill can move rapidly and, hence, so would Yahoo's independence as a stand alone company.

Here's a quick view of the road traveled thus far as chronicled by News.com, as well as other sites, such as Larry Dignan's Between the Lines on ZDNet, Henry Blodget's Silicon Alley Insider, and Kara Swisher's BoomTown.