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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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RE: Why?
By BMFPitt on 2/12/2008 12:38:39 PM , Rating: 5
I've never liked Yahoo! for anything. The only thing I use it for are fantasy football leagues I can't convince to switch over to CBS Sportsline. MSN is a website I see about once per installation of Windows, if it comes up faster than I can type in www.mozilla.org.

On the other hand, iGoogle has broken the decade long stranglehold that about:blank has had on my homepage. It is incredibly useful in more ways that I can bother listing here, and I don't know what I'd do without it.


RE: Why?
By wordsworm on 2/13/2008 6:53:22 AM , Rating: 4
You never tried Yahoo chess, hearts, or any of the other games that they have? Yahoo Messenger, imo, is the best. Google's is interesting, but a far cry from the equivalent.

Until MSN put restrictions on their encyclopedia, I used it more than any other search engine. I don't use Yahoo's search engine, but that's a matter of habit. It seems to be every bit as good as Google's. Google's news page is kind of a joke. In fact, this whole thing has inspired me to take a second look at Yahoo's search and I've noticed some innovations that weren't there before. In fact, I'm a little bit surprised. I emailed them awhile ago a suggestion to create search subscriptions: example, I would like to get a certain notification of new websites that have been found by the search engine to do with specific subjects such as Vista 64 gaming. Unfortunately, I haven't heard back from them, and I don't expect I will. But for other things, I've found them to be surprisingly innovative and superior in quality to what I've become used to with Google. When's the last last time you really explored Yahoo's search engine? Check it out, it might convert you back to them.

The only thing that Yahoo doesn't do nearly as well is advertising. But as far as the end user is concerned, Yahoo has so much more value it's hard to imagine that Google has managed to compete.

As some have said, correctly, it's also about growth. Google is still growing, and Yahoo's growth is slower. A part of the reason for that is Yahoo's complex service. They're many things, and Google is very simple: it's just good at one thing - searching and in particular, advertising.

If you're on dialup, then Google is clearly the way to go. If you've got high-speed Internet, then Yahoo has much more to offer. You might say that this is the reason why it makes so much money. It doesn't 'clutter' its space with 20 ads.

If MS wins this bid, the entire net will be worse for it. I wish the anti-Scientologists were as active against this hostile takeover.

If MS wins, I think it will be a big loss in the long run for them. I don't mean it in the way some of you have - that Yahoo isn't worth anything, and that it might prove to be a liability - I mean that many people might hate MS more for taking their beloved Yahoo and ruining it. It will make MS look more like Borg than ever before. Maybe it would be enough to make more people turn their backs on them. I know I would be irate, and I'm already tempted to turn my back on MS. Also, their dominance on the OS market is starting to slip, and I can't help but think that slipping will accelerate regardless of Yahoo, but their actions could possibly make that acceleration occur even faster. This could very well be the kind of massive mistake that could bring a juggernaut like MS down to size. Of course, this could be wishful thinking on my part.


"Young lady, in this house we obey the laws of thermodynamics!" -- Homer Simpson

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