SAN FRANCISCO (AFP) - Yahoos rejection Monday of Microsofts buyout offer sets the stage for the US software giant to up the ante or attempt a coup by ousting the Internet firms board of directors.
Yahoos board of directors spurned Microsofts takeover bid, saying the 44.6-billion-dollar offer is too low and not what is best for shareholders of the veteran Internet company.
Yahoo said it decided "after careful evaluation" that Microsofts bid "substantially undervalues Yahoo." As a result, the board "concluded that the proposal is not in the best interests of Yahoo and our stockholders," it said.
Microsoft called the boards action "unfortunate" and urged Yahoo to reconsider its blockbuster bid to combine the two tech titans and said it offers "superior value" to Yahoo shareholders.
"As we have said previously, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoos shareholders are provided with the opportunity to realize the value inherent in our proposal," Microsoft said.
Microsoft, which called its bid "full and fair," could switch from wooing Yahoos leaders to declaring war on them by making allies of shareholders in order to oust board members at annual elections mid-year.
Yahoos 10 board members are up for re-election. The deadline for board member candidate nominations is in March.
A small group of Yahoo shareholders last week filed a civil suit against the California company in a state court for not accepting a bid Microsoft made for the company early last year, when the stock price was higher.
"Based on conversations with stakeholders of both companies, we are confident that moving forward promptly to consummate a transaction is in the best interests of all parties," Microsoft said in its release.
"The Yahoo response does not change our belief in the strategic and financial merits of our proposal."
Yahoo has rules in place that prevent Microsoft from being able to buy more than a 15 percent stake in the company directly from shareholders, so a board-circumventing "tender offer" is not feasible.
Reports indicate Yahoo wants at least 40 dollars per share and that Microsoft considers 35 dollars a top bid.
On February 1, Microsoft unveiled what it called "a generous" offer to take over Yahoo, in an effort to merge the worlds biggest software company with a major Internet player to take on search and advertising juggernaut Google.
Microsoft proposed 31 dollars per share, a 62 percent premium above Yahoos closing price a day earlier.
Yahoos share price climbed in the wake of the offer, and closed up over two percent at 29.87 dollars Monday before Microsoft reiterated its offer.
Microsofts stock price has slipped since the offer was made, and dropped just over one percent to 28.21 dollars Monday after news spread that the company might have to spend more to buy Yahoo.
Some analysts said the wording of the statement by Yahoo suggests that the company is holding out for a better price, and guarding against potential lawsuits from stockholders.
"Right now they are haggling," Silicon Valley analyst Rob Enderle told AFP. "Yahoo is not saying no at any price. They are saying the Microsoft offer is not strong enough."
It is common for companies to rebuff initial buyout offers and hold out for sweeter deals.
Analysts at RBC Capital Markets said the rejection of the Microsoft bid signals that there is no sign of interest from competing bidders and that negotiations have entered a "counteroffer stage."
Microsoft says it is prepared to tap into financial markets and leverage a buyout for the first time since it was founded in 1975.
Yahoo chief executive Jerry Yang sent a message to employees last week, assuring them the firms leaders were exploring ways to avoid a Microsoft takeover.
Google meanwhile has condemned Microsofts effort as an attack on "the underlying principles of the Internet: openness and innovation."
Analysts say the goal of the takeover is to better compete with Google, whose dominance of Internet advertising, backed by its powerful search engine technology, has come at the expense of Microsoft and Yahoo.
Reports surfaced Monday that options being considered by Yahoo include merging with faded Internet star America Online (AOL), now owned by Time Warner.
No comments:
Post a Comment