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Breaking News: Yahoo! to reject Microsoft bid
According to the Wall Street Journal (subscription required for full article access, or you can read it via Google News), the Yahoo! board is going to reject Microsoft's unsolicited $44.6 billion acquisition offer. According to the Journal, the Yahoo! board determined that the $31 per share price significantly undervalues the Yahoo! brand. The board is also reportedly planning on sending a formal letter to Microsoft on Monday explaining their position.
So what now? Well, the Journal is reporting that sources close to the board are not going to hold out for anything under $40 a share, an increase that would add $12 billion to Microsoft's offer. The thinking is that Microsoft won't be willing to pay that much, and the alternative, a hostile bid, would be too detrimental to the company's overall value, as board members and key employees would quit.
In the last week, Yahoo! has entered talks with Google about possibly using their search advertising technology and has been in discussions with other companies as well.
Our thought? If Microsoft really wants something, another $12 billion or having to oust the board isn't going to be enough to keep them away.
We'll keep you updated as the story progresses.
Comments
13
Subscribe to commentsMikeFeb 9th 2008 2:18PM
"increase that wold add"
would?
BobFeb 9th 2008 2:24PM
If you look at the reasoning, you can tell Yahoo is grasping at straws with contradicting logic:
http://www.techconsumer.com/2008/02/09/yahoo-board-to-reject-microsoft-bid-wants-more-or-help-from-google/
ErosFeb 9th 2008 3:43PM
Report: Yahoo will reject Microsoft bid.
Translation: Yahoo desperately hoping Microsoft will raise bid.
michaelFeb 9th 2008 4:55PM
Which is too bad. I was thinking the best of Y! + the best of WinLive/MSN = one great web services/content site.
Oh well. Maybe next time.
And I think Y! is dumb refusing such an offer. "Oh, we don't like your deal because we're worth way more than that. I want to squeeze some more money out of you guys, and then we'll make a deal." - sounds really greedy to me.
campbellwatermanFeb 9th 2008 5:09PM
Anything to keep the Microsoft/Google duo monopoly controlling everything. All power to Yahoo and all the other smaller competitors.
HylicFeb 9th 2008 6:58PM
And Yahoo outsourcing their search to Google will do what?
Christina WarrenFeb 9th 2008 7:03PM
No, not outsourcing their search, using AdSense to try to make more money to stave off the buyout. But again, what it'll actually do other than possibly slow down the inevitable is pretty unclear.
RPFeb 9th 2008 9:04PM
Yahoo stock was down to $19 before the Microsoft bid, after reporting a 23% earnings drop in Q4. Microsoft bids $31/share.
Yahoo says they're worth $39-40/share? Maybe in theory, but not while Google is kicking their butt.
JamarFeb 11th 2008 6:50AM
Actually, the "undervalued" comment has some basis in reality. Go to Japan- Yahoo Broadband is something people actually want and use (100Mbps symmetric fiber connection for ~$50/month- who wouldn't?), Yahoo Auctions has run eBay out of the market, Yahoo Mobile is tied into a big-name carrier as well as an outside service, etc. But, the secret is that Yahoo Japan is partly owned by Softbank, a telecom. They'd be better suited to buy Yahoo because they're pretty much the only people that have managed to make a success out of the Yahoo name.
RPFeb 9th 2008 9:08PM
Yahoo's biggest fear is well founded -- valuable employees may quit, depending on how the deal is structured.
I'm not sure that Microsoft is that good at building synergy. If they keep the projects separate, and merge various brands, that may work. But it's hard to see the Yahoo mail team working productively with the Hotmail team, for example. Or the Yahoo search team working with the Live search team.
Microsoft talked about reduced data center costs. Seems like $44 billion could buy a lot of data centers! And I'd guess Microsoft is running lots of Windows servers, while Yahoo is not. So how do you merge those?
Christina WarrenFeb 9th 2008 9:24PM
I agree, there are lots of feasibility questions. However, I think that if Microsoft could treat Yahoo! the way they treat X-Box, as a pretty separate autonomic organization, and only merge necessary products or brands, I think it could work. That's a very big "if," obviously - but I don't think that it is out of the realm of possibility.
I think the brand "Yahoo!" is worth more than the company itself, at least from a market perspective. It doesn't surprise me that Yahoo! is trying to push for more money, but ultimately, the argument might end up being pretty futile if/when Microsoft decides to really play hardball.
RPFeb 9th 2008 9:11PM
Microsoft *has* done a nice job on 1) image search, 2) video search, and 3) "birds eye" maps (Pictometry data). Much nicer that what Google has, sad to say, although maybe a bit slower and clunkier.
daveFeb 10th 2008 6:29AM
Yahoocat is not amused