Posted February 9, 2008 7:50 pm by with 13 comments

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UPDATE: Yahoo has now officially rejected Microsoft’s offer saying it “substantially undervalues” the company.

The New York Times is reporting that Yahoo’s board of directors plans on declining the $44.6 billion dollar offer from Microsoft. A Yahoo board meeting on Friday apparently covered possible responses to Microsoft’s proposal and at the end of the day it was believed that the offer for Yahoo was below what the board believed the business is worth.

The board also spent time covering options for maintaining Yahoo is a viable entity, including how Yahoo might get Microsoft to increase their bid. Currently it is expected that Yahoo will post an official statement on Monday declining the offer.

The Wall Street Journal is reporting that Yahoo is actually seeking more money for the company and wants Microsoft to raise their offer from $31 a share to something above $40 a share. It also speculates that Microsoft is unwilling to attempt a hostile acquisition because it could potentially create regulatory implications as well as creating the possibility that it would require removing the entire existing board of directors.

A VC also has an interesting take on the situation. He is looking for Yahoo to come out of their board meeting with an action plan for restructuring the business not just a rejection of the Microsoft offer.

There is a lot of conversation going on with this potential landscape altering offering out on the table. It is also important to remember Microsoft recently agreed to acquire Fast Search and Transfer last month for 1.2 billion dollars.

I am sure there will be more coverage of this topic as it changes almost daily.

  • Nice…I think? I wonder if Microsoft will pay the extra money per share? I’m more interested to see how Yahoo might restructure their business if the offer is declined entirely.

  • Yahoo! R.I.P
    Google Wins.

  • You’re missing the point, as are most online commentators, Roderick. The point is that over 2/3 of the outstanding stock for Yahoo is held by institutional investors: if they say “yes” to the offer, it doesn’t make any difference what the Yahoo Board of Directors says…

    Here, I write about this quite extensively: http://www.intuitive.com/blog/yahoo_board_says_no_to_microsoft_but_so_what.html

  • @Dave – but at the end of the day, the board casts the official word on whether the offer has their approval or not. As Roderick alludes to, even if investors say “yes” if the board/management say “no” it makes things a whole lot tougher going.

    Besides, we all know that MSFT bid low. I’m sure even they expected to have to pay higher for Yahoo–in fact, I seem to recall Balmer saying he’d do whatever it takes.

  • Seems like it could be a hostile takeover then?

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  • @ Dave Taylor – I appreciate what you have to say, but I actually didn’t state any of my own opinions. There is a lot of conversation out on the web about this topic already, all I did was try to sum up some of the highlights from the primary sources.

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  • Sam

    All MS needs to do is buy 51% of the outstanding stock from institutional investors and they own the company.

  • Oh, i didn’t know abot it. So, i thought that Yahoo will be a part of Microsoft, but it will not. So, i understand now why Yahoo and Aol merger.

  • “It also speculates that Microsoft is unwilling to attempt a hostile acquisition because it could potentially create regulatory implications as well as creating the possibility that it would require removing the entire existing board of directors.”

    A hostile acquisition? Microsoft?… Never

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