Get three services for $100/moMicrosoft gives Yahoo three weeks to do a deal
Updated at 6 p.m. PDT with comments from an institutional investor.
Microsoft on Saturday issued an ultimatum to Yahoo, giving the Internet search pioneer three weeks to enter formal merger negotiations and conclude a deal.
The software giant threatened to launch a proxy fight to unseat Yahoo's board of directors, as well as take its case straight to Yahoo investors should no deal be reached in that period.
And as a further cattle prod in getting a deal consummated, Microsoft threatened to lower its existing bid, citing how Yahoo's value will be hurt if it needs to resort to such hostile means.
"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," Steve Ballmer, Microsoft chief executive, stated in his letter to Yahoo's board of directors. "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."
Microsoft initially offered an unsolicited buyout bid of $31 per share for Yahoo back on February 1.
Microsoft's big bid for Yahoo
Since its initial offer, executives from both companies met four weeks ago for the first time to discuss the merger and once again last week with no results of moving it into formal talks.
Yahoo's board is expected to discuss Ballmer's letter next week, as well as provide a briefing on how talks between the two companies went last week, one source said.
Ballmer's letter is no slam dunk in driving Yahoo to formal talks. Yahoo, which already rejected Microsoft's initial offer as too low and one that undervalues the company, is leery of entering formal talks without assurances Microsoft's bid will be higher.
"We could enter formal talks and they might increase the bid, or they might not," the source said, noting opening their financial books to the software giant may make little difference. "Our books are already open. We're going to report our earnings in a couple weeks."
Yahoo, meanwhile, is cognizant that Microsoft wants to get the deal done and past federal antitrust regulators, otherwise called the Department of Justice (DOJ), while President Bush is still in office, the source said.
One former high-level antitrust attorney with the DOJ, who is now in private practice, said it usually takes six to eight months to move a deal through the DOJ. There is approximately eight months left before Bush's term ends.
Meanwhile, another source noted back in early March that Microsoft has its opposition slate of directors for Yahoo all ready to go.
The opposition slate would move to unseat Yahoo's 10 directors at the next annual shareholders meeting. Should Microsoft take such action and prevail, it's likely the opposition slate would vote to remove Yahoo's "poison pill," which makes it prohibitively expensive to acquire the company. A poison pill floods the market with additional shares of a target company, should a hostile bidder acquire too many shares of a company's stock.
Ballmer, in his letter, indicated that Microsoft would ask Yahoo investors to tender their shares to the software giant, which would park them until it could get its opposition slate elected. While Microsoft would not be able to gain control of Yahoo by taking that measure, it will send a clear message to Yahoo if enough of the Internet company's investors side with Microsoft. Basically, it would show Yahoo how successful Microsoft would be in getting its opposition slate of directors elected, when those investors are asked to vote on Yahoo's new board.
Yahoo should brace itself for an onslaught of investor wrath come Monday.
One large institutional investor is planning to call Yahoo's independent directors and management on Monday.
"I'm not happy with how Yahoo has handled it. I think they've bungled it while Microsoft has played it pretty well," the investor said. "I like that (Microsoft) has put a clock on this. I previously told Yahoo's independent directors that if they didn't move forward with this, I might support a new board."
And while this investor had a brief thought of banning together a group of major Yahoo investors to make a public statement in support of Microsoft's bid, the institutional investor noted that there would be a number of filing hoops to go through with the Securities and Exchange Commission. He noted a more likely scenario will be for institutional investors to make individual statements.
The investor previously advised Yahoo to move forward and fast in doing a deal with Microsoft, given the changes in January with a new administration in the White House and in the European Union. He also advised Yahoo's management to ditch the idea of doing a roadshow with its three-year strategic plan, and instead spend the time getting a deal in place.
"We all think Microsoft should pay more for Yahoo and, if it is handled right, Microsoft will likely pay more," said the major investor, who thought $34 to $35 per share is a good range.
The investor added: "Microsoft has to do this deal. The paradigm is shifting away from their core business to the Internet. They've already spent billions of dollars but haven't gotten it right. This is such a logical deal for them to do."
- Bookmark:
- Digg
- Del.icio.us
For me, this "push" means that MS is in a weak position.
From its point of view, it is riskying a lot, from Google's war to
public image.
What if MS does not get enought shareholders to get the board?
(Ot if they cost too much?)
What if shareholders do not accept the bid? MS is treating the
management with "decreasing" the value! They can almost
convert Y! managers in "shareholder's saviors"!
This can become the worst nightmare for MS.
(It is too late to take lessons from Oracle's CEO on "how to get
what you want".)
We get it, you hate Microsoft. What does that have to do with the proposed merger/purchase?
You would have to hate yahoo too? From what I read, that is the gist of your arguments.
Go back to sleep.
What they don't need is more bulk.
They are going into debt which is going to severely hamper any new projects for quite some time.
It will take at least a year to get this approved, and approval is not automatic.
After the buyout it will take years to get Yahoos projects in line with Microsoft's.
All of this money and effort to compete with a lean and efficient company that can turn on a dime even though it will make MS less competitive.
I am not complaining, it is just fun to see MS kill itself.
with $44 billion, Microsoft can start TEN companies like Yahoo from ZERO, but, if they want to burn so much money, why don?t use a ?slice? of them to do something really new and better, as explained in this article:
http://www.ghostnasa.com/posts/027applenasa.html
the same suggestion is good also for Apple that has $18 billion CASH in its pockets
..
My how things have changed.
1. Yahoo: A user-friendly portal that extends the real world to the virtual world
2. Google: Yellow page and web technology frontier
3. Apple: Another choice of operating system with gorgeous UI
4. Linux: Just setup an opensource project by Microsoft itself, which subsidizes Linux solutions development. This is the hardest part to integrate all Linux solutions and OS into one.
5. W3C: The final step. Rule the world, both worlds.
Ballmer is out of his mind though. Its kind of pathetic really. Its like the chair throwing incident (over Google) at Microsoft all over again!
Acts of desperation don't equate to quality products. It just creates utter confusion. When will Microsoft get this. If its not in their engineering to begin with, aquiring it somewhere else won't help. It creates more of a downward slope.
But I guess from an entertainment stand-point (strictly on a comedic level, of course) it should
be interesting to see how Microsoft worms their way out of this one. Maybe it will take form with Window's Seven AlphaMega (the successor to Vista!) or a ZuneBox 3? Haha.
Microsoft and their sensationalism. God love them!
path of Netscape when Microsoft gets done with it. AOL was bad
for Netscape like Microsoft is bad for Yahoo.
Let's hope the deal goes sour and Yahoo survives this one. This
merger is not good for consumer choice.
But Microsoft can use Open Source under their Yahoo brand if they own Yahoo because Yahoo is built on Open Source. This might be another compelling reason why Microsoft wants
Yahoo that no one seems to have mentioned so far.
Perhaps Microsoft understand that using their stuff puts them at a disadvantage to Google who use a cut down and efficient version of
Linux called Goobuntu.
Windows unfortunately comes with everything including the kitchen sink and is resource hungry, not mention power hungry. They did this to get around the bundling issue by saying it is part of the OS and therefore not bundled applications. This may have paid off in court, but is a blunder for security and efficiency in the data centre which is central to cloud/grid computing.
So Microsoft need to use Open Source especially Linux to be competitive with Google in the data centre. Yahoo is one way they can use Open Source without admitting that their OS is not good enough.
MS is getting the ^%* kicked out of it in the online search/ad
revenue business, so they do what they always do in similar
situations... instead of improving their operation, they buy out
their competition.
If anyone thinks that this somehow "improves" competition, pull
your head out of your backside and consider this;
Once MS destroys Yahoo, there will be but TWO players left in
the arena, and there'll never be another chance of another one,
EVER, entering this field again.
Stupid web site.
Who cares?
Cash in.
Park across the street and great the escaping Yahoo!s with beer.
The sick freaks from Redmond will arrive to a near empty building, a company running on a real OS (BSD)no one in MSFT can manage and a skeleton crew of refugee Dwight Schrutes, quivering with delicious expection to join a cult of losers as weird, friendless and demented as they are.
Then you start another winning business and occassionally call Ballmer and ask if he is still running that overpriced website you sold him.
Then you hang up.
Laughing.
- Why the pushing?
-
by faramir77
April 6, 2008 10:33 PM PDT
- Why do I sense Microsoft is pushing Yahoo around? Is there a sense of urgency to takeover Yahoo. I'm guessing they are preparing for something big in the coming months, and every moment Yahoo delays, it sticks a stick up their butt a bit higher. What in the world is going on?
-
Reply to this comment
-
-
See all 57 Comments >>Fara - http://www.pickmeuptoday.com