Yahoo Rejects Microsoft wants more money

Microsoft loses bid Yahoo and must choose between a fully hostile bid, a higher offer, or wait for Yahoo to fall further in the hard times

The Yahoo-Microsoft saga, which has played over the last two weeks, began with Microsoft making an unsolicited bid for Internet giant Yahoo. Thickening of the plot with the resignation of Chairman Terry Semel of Yahoo for the board and the Google threat of a lawsuit to block the movement. While many analysts considered the operation a shoe-in, the initial analysis of Yahoo was prepared to accept the agreement in the first place, apparently off the mark.

Inside sources had warned that CEO Jerry Yang, who had a considerable influence on the final decision has been very wary of Yahoo get digested in the Microsoft empire. These sources have called such a development “Jerry’s worst nightmare.” Maybe they should have taken into account before.

In a move that had been expected since late last week, the board of Yahoo on Monday formally rejected Microsoft’s $ 45B bid. The rejection made it clear that the board felt that anything less than twice the price of the shares would be too little. Yahoo accept an offer of $ 40 per share, or higher, far more than the offer from Microsoft, which amounted to about $ 31 per share.

The statement by the board of Yahoo, Microsoft attacked the offer as cheap, saying, “The board believes that Microsoft underestimated proposal substantially Yahoo, including our global brand to a large audience around the world, major investments in the past advertising platforms and the prospects for future growth, free cash flow and earnings potential, as well as our substantial investment unbound. “

This contrasts Microsoft Chief Executive Steve Ballmer of valuing Yahoo, which called his company the offer “generous”.

The board made it clear that their ears open to a wider choice of Microsoft or other investors, stating that Yahoo is continuously evaluating all of its strategic options in the context of the rapidly changing industry environment. “

Yahoo struggles reflected major layoffs and a forecast of 2008 that many in the investment community considers disappointing. Some see the movement of Yahoo and gutsy simply an attempt to try to reach Microsoft to its offer. One thing that may stand in the way of this, however, is the lack of competitive interest. Google After criticism, it is unlikely that Google would have an offer on the ground, and it may not be able to do so yet, because of possible violations of the antitrust laws stemming from a Yahoo-Google merger. Fox owner Rupert Murdoch, known for the purchase of the properties, has also declared that he has no interest in Yahoo.

As no one else has shown much interest in the fight Yahoo, Microsoft may feel little need to rush, and may choose to elect to sit and wait like a vulture circling a beast tired, ready to strike when Yahoo circumstances make it more likely to be treated.

Another possibility that remains is that Microsoft could make a hostile bid altogether and bring its offer directly to shareholders of Yahoo, attempting to outmaneuver the board. Such a move could work, but it runs the risk of seriously damaging their future prospects if it is rejected.

Yahoo turned down an offer from Microsoft in 2006 and 2007 in private conversations, but this offer was the first Microsoft public bidding, and also his first public rejection. Microsoft refused to comment, so his next move is anyone’s guess. Microsoft, however, had already made it clear that it considers the move an essential step for both companies, which reads “Today, the market is increasingly dominated by a player who is consolidating its dominant position through the acquisition. Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers and publishers. “

With the prospect of such an alliance evaporates almost as quickly as it was born, the news is certainly a disappointment to the leadership of Microsoft.