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Steamed Microsoft CEO Steve Ballmer is ready to take on Yahoo in a proxy fight should they refuse to be assimilated into the company.
Microsoft's CEO delivers Yahoo board final ultimatum

Microsoft CEO Steve Ballmer, not typically known for being a reserved businessman, is on the verge of losing his patience with Yahoo, he announced in a letter to Yahoo's board.  Ballmer is a strong advocate of the merger, but the board despite arranging some meetings with Yahoo management and Microsoft management last month, has done little to consider the merger since rejecting Microsoft's $44.6B USD offer.

In fact the board has actively fought getting swallowed into the Microsoft empire, by acquiring additional advertising through Maven and releasing new services.  They also tried futility to broker a deal with rival Google for joint advertising.  Yahoo refuses to accept Microsoft's valuation of the company, despite the fact that it is significantly above their stock price.  Yahoo insists their company is worth substantially more.

In his letter Ballmer expressed frustration at this "limited interaction," stating that what little action the pair had was not "meaningful."  He states that this is "unfortunate."  Ballmer fumes, "Our goal in making such a generous offer was to create the basis for a speedy and ultimately friendly transaction. Despite this, the pace of the last two months has been anything but speedy."

Ballmer writes that Yahoo has two choices -- accept the offer within three weeks and prepare for the merger in earnest or face a proxy battle in which Microsoft will seek to oust the Yahoo's board of directors and replace them with a new pro-Microsoft board.

Microsoft increasing aggression in its hostile takeover attempt seems to confirm reports by analyst that Microsoft would not raise its bid, which offers a 62 percent premium on the company.  Ballmer writes angrily, "The public equity markets and overall economic conditions have weakened considerably.  At the same time, public indicators suggest that Yahoo!’s search and page view shares have declined. Finally, you have adopted new plans at the company that have made any change of control more costly."

Microsoft hopes to avoid a proxy battle, but is willing to enter one if necessary.  Such a battle would be costly both financially and to the reputation of Microsoft.  However, it would be particularly costly to Yahoo, which would be rocked by having its board deposed.  Ballmer states that if the terms are not met, the proxy battle will begin in three weeks.  Warns Ballmer, "If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company."

A Yahoo spokesman would not comment on the letter.  For the full Ballmer letter, refer here.

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Waiting Game
By Dhaval00 on 4/6/2008 3:43:25 PM , Rating: 2
Even though I am oblivious to the internal logistics, I could see why Yahoo!'s "waiting game" would piss M$ off. The economy is only going to get worse, which would mean the ~$45 billion offered by M$ would be worth more 6 months down the road than now; essentially, more money for Yahoo!'s executives. Of course, M$ would lose value if the deal keeps getting delayed.

RE: Waiting Game
By JediJeb on 4/6/2008 4:16:32 PM , Rating: 2
I haven't kept track of this but I am guessing the SEC has already approved the merger. If not wouldn't it be funny for MS to buy all that stock then the SEC say no.

RE: Waiting Game
By cochy on 4/6/2008 11:28:13 PM , Rating: 2
I don't think mergers can be approved until they actually happen?

RE: Waiting Game
By eye smite on 4/6/2008 7:07:27 PM , Rating: 3
It's just Bill letting Steve throw a temper tantrum like a child, and this is part of the reason MS is not making any happy customers lately. Don't they still have WHS to fix?

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