Print 50 comment(s) - last by DigitalFreak.. on Feb 13 at 7:19 PM

Microsoft plans to take its bid for Yahoo directly to shareholders

In the world of mergers, there are numerous levels of "hostility" which characterize bids.  There are unilateral talks, mutually agreed upon, which are typically labeled as more germane, even if one company ends up absorbing the other. 

Then there are unsolicited bids, such as Microsoft's initial offer to Yahoo, which are often labeled as "partially hostile".  On the far end of the spectrum are "fully hostile" bids, in which one company tries to bypass another company’s executive and board leadership by offering a buyout directly to shareholders.  Among the famous examples of takeovers considered "hostile" was the HP and Compaq merger, which passed by a meager 51% margin in a shareholder vote.

Having been rejected by Yahoo's board, Microsoft commented that it was "unfair" that Yahoo did not embrace its "full and fair proposal to combine" the companies.  Now, Microsoft indicates it is planning to bypass the board and take the issue directly to a shareholder vote.  Microsoft states, "We are offering shareholders superior value and the opportunity to participate in the upside of the combined company. The combination also offers an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market."

Microsoft's statement continues, "The Yahoo! response does not change our belief in the strategic and financial merits of our proposal. As we have said previously, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!'s shareholders are provided with the opportunity to realize the value inherent in our proposal."

The decision by Microsoft to pursue a fully hostile takeover is truly a sign of the times at Yahoo.  Yahoo despite promising big changes continues to lose ground to Google in search engine market share, which in turn leads to sinking advertising profits.  The company dismissed 1,000 employees recently.  Yahoo aggressively acquired companies throughout last year, but its investments left it with little to show for it.

The hostile bid by Microsoft may nix a future board-arranged merger with Yahoo, but at this point it may be a moot issue.  If Microsoft has to, it can simply wait out the company until it falls further towards its demise, though it would prefer a quick merger while the company still has some vitality.

Yahoo has a lot to offer Microsoft.  Despite its dropping search engine share, Yahoo still represents a significant portion of the market and a major market name.  An alliance with Microsoft could establish a strong competitor to Google.  Further, Yahoo has a wealth of intellectual property, domain names, and other assets that could come in handy to an ever-evolving Microsoft.

The board is left to ponder Microsoft's words, and their significant decision -- as it may be their last.

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Yahoo Board
By Trisagion on 2/12/2008 10:57:26 AM , Rating: 4
That's what happens when you get greedy. It's ok if the board decided that they didn't want to be taken over by Microsoft, but saying the offer 'undervalued' the company, whose shares hadn't seen such value in years, tells me that they were more keen in seeing how much they could milk out of Microsoft than their shareholders interests.

RE: Yahoo Board
By UzairH on 2/12/2008 11:49:10 AM , Rating: 4
Greed is human nature. Too bad most board execs can't separate their base human natures from their rational, professionally trained selves.

RE: Yahoo Board
By amanojaku on 2/12/2008 11:55:50 AM , Rating: 2
I agree that Yahoo! isn't worth $44.6B, but I also think Yahoo! is desperate to keep the company as is, even if the board and executives are forced to relinquish control. That might be the reason for the outrageous bid, to turn Microsoft off, which clearly backfired.

Having been rejected by Yahoo's board, Microsoft commented that it was "unfair" that Yahoo did not embrace its "full and fair proposal to combine" the companies.

Combine? We all know this is BS. If Microsoft buys Yahoo! there will be no more Yahoo! MS, like most companies, has a history of buying things to phase them out. Hotmail is one of the few exceptions.

Not that Yahoo! doesn't deserve to be phased out. The only things of value that I am aware of are the search (I never use MSN search, so I can't compare,) the messenger, the email, and Yahoo! music. I could be writing out of ignorance, but I just don't see where there is any value in that company.

RE: Yahoo Board
By wordsworm on 2/12/2008 12:05:42 PM , Rating: 2
So, what does MS have that Yahoo doesn't do better?

RE: Yahoo Board
By amanojaku on 2/12/2008 12:11:38 PM , Rating: 1
Nothing. I'd say they're both on equal levels of suckiness when comparing search, email, and IM. And I use the email and IM of both. If I didn't have a pre-MS Hotmail account and a pre-Yahoo! Geocities account I wouldn't be on either service.

RE: Yahoo Board
By djcameron on 2/13/2008 9:40:07 AM , Rating: 2
Well... Hotmail is way better than Yahoo! mail, and MSN Messenger is better than Yahoo! Messenger. Let's see, oh yeah, MSN homepage is better than the Yahoo! homepage. That pretty much sums it up.

RE: Yahoo Board
By Donkeyshins on 2/12/2008 12:56:02 PM , Rating: 2
Actually, this doesn't make sense if MS rebadges Yahoo and gets rid of the current Yahoo staff. If Yahoo remains an independent entity within the general MS collective (like Bungie did while it was owned by MS) then it may possibly turn out the way that Ballmer envisions it in his mescaline-fueled dreams.

RE: Yahoo Board
By crimson117 on 2/12/2008 1:21:26 PM , Rating: 2
They'd never phase out the yahoo name - it's too valuable.

RE: Yahoo Board
By ImSpartacus on 2/12/2008 2:05:36 PM , Rating: 2
I agree, Yahoo will never die. Microsoft understands that Yahoo is a huge name on the internet. Yahoo will stay.

RE: Yahoo Board
By imperator3733 on 2/12/2008 2:25:02 PM , Rating: 2
Yeah. I think that if this happens, Microsoft should merge MSN and Windows Live into Yahoo and use the Yahoo name. They should then keep Yahoo separate from the Windows division (as well as the other divisions) and let them take care of the online stuff. It might take a while to combine all the products, but once they were done they would have a well known brand to challenge Google with.

RE: Yahoo Board
By DigitalFreak on 2/13/2008 7:19:00 PM , Rating: 2

RE: Yahoo Board
By borowki on 2/13/2008 3:27:06 AM , Rating: 2
Your comment makes zero sense. For whom is the Yahoo board trying to get more money? The shareholders, of course. As the Economist noted, shareholders would probably have taken board members to court had they accepted the first bid.

"We shipped it on Saturday. Then on Sunday, we rested." -- Steve Jobs on the iPad launch
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