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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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Well.
By gochichi on 2/13/2008 12:53:59 AM , Rating: 2
I think that MS should drop the issue. Better yet, MS should take the issue to its own shareholders first.

What I don't get is why MS doesn't just come up with another brand name to compete with Google.

MS likes to copy, they're all about it, and it's worked well and they should continue to do so.

This is what I suggest.

MS took Widgets and copycatted them but changed the name to Gadgets.

Wi to Ga. That's it.

So this time they need to go from Goo to Wee or Wuu... not sure which.

That would leave them with:

Weegle or Wuugle.

I like Wuugle, it sounds closer to the real company, so that's what they should go with. I understand that it's not as powerful a name as Yahoo! just yet, so I'll take $500,000 for Wuugle. Microsoft, you there? That's a deal, and I won't even call it hostile at all. Hell it could be an all share deal, and I wouldn't even sell the shares.




"You can bet that Sony built a long-term business plan about being successful in Japan and that business plan is crumbling." -- Peter Moore, 24 hours before his Microsoft resignation

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