After sending a letter, which most in the news industry
perceived as threatening, Ballmer
sent a clear message to Yahoo's board -- prepare to turn over ownership of
the company within three weeks, or prepare to be deposed in a proxy
battle. Yahoo's leadership occasionally seemed open to negotiations,
having a joint
executive meeting between its executives and Microsoft's last month.
However, Yahoo has more often than not resisted Microsoft's
current advances, since
its initial rejection. Microsoft
refuses to raise its $44.6B USD offer, while Yahoo states that the offer
significantly undervalues the company.
All indications are that the companies are headed for a showdown which will put
the power and influence of Yahoo's board to the test. In a response
letter to Microsoft CEO Steve Ballmer, chairman Roy Bostock and chief
executive Jerry Yang expressed that they are not opposed to a deal, but would
not accept such a low offer.
Yahoo's confidence was partially due to its reaffirmation of first-quarter and
year-end outlooks, which some worried would be revised lower. Also, Yahoo
cites its three-year financial plan and its new AMP advertising management
platform as additional strength. The company has tried to stay
independent and turn around by acquiring
advertising companies such as Maven and by releasing
Yahoo's response states that Ballmer's letter "mischaracterizes the nature
of our discussions". The letter's hostile language, Yang and Bostock
state is "counterproductive and inconsistent with your stated objective of
a friendly transaction."
The pair continues, "Your comment that we have refused to enter into
negotiations to conclude an agreement are particularly curious given we have
already rejected your initial proposal, nominally $31 per share at the time,
for substantially undervaluing Yahoo! and your suggestions in your letter and
the media that you are considering lowering the value of your proposal.
Moreover, Steve, you personally attended two of these meetings and could have
advanced discussions in any way you saw fit."
Yahoo also cites concerns over antitrust issues that might arise from a
merger. As it points out, a merger would include an extensive regulatory
review. Rival Google
has suggested that a merger may violate antitrust laws and that it might
fight a merger on such basis in court.
Yang and Bostock close the letter on an open but firm note stating, "We
are open to all alternatives that maximize stockholder value. To be clear, this
includes a transaction with Microsoft if it represents a price that fully
recognizes the value of Yahoo! on a standalone basis and to Microsoft, is
superior to our other alternatives, and provides certainty of value and
certainty of closing."
Despite the pair's offer, unless Microsoft reverses its current policy, it
appears that Microsoft will likely prepare to finalize its hostile takeover
attempt with a proxy battle within three weeks.