backtop


Print 55 comment(s) - last by mindless1.. on Apr 8 at 11:02 AM


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.


Comments     Threshold


This article is over a month old, voting and posting comments is disabled

Boycott MS
By wordsworm on 4/6/2008 7:58:00 PM , Rating: -1
Maybe if all Yahoo fans banded together to boycott MS products, that would stop the evil empire in its tracks. I used to think that maybe MS was evil. Now I know it's evil. Was Gates ever as bad as Baller?




RE: Boycott MS
By mcturkey on 4/7/2008 12:18:53 AM , Rating: 3
What Yahoo fans? Yahoo is only a competitor to Microsoft in the online search/advertising arena. A boycott makes absolutely no sense in this situation.

The article is overly dramatic, but Ballmer is correct that a proxy fight will occur, and Microsoft will win. Shareholders are, by and large, furious at Yahoo's board for the deal not going through. If you had something that the market acknowledged was worth $20, and you were suddenly offered $35 for it, you would want to sell for that price. As much as everyone loves to hate on Microsoft, this merger is for the best on all accounts. Google is far and away the dominant player in the online search and advertising market. Only together can Microsoft and Yahoo provide competition. Competition keeps Google on their toes. I'm inclined to believe Google will not become stagnant, but having to fight to hold market share will keep the innovations coming, and benefit end users greatly.


RE: Boycott MS
By Pudro on 4/7/08, Rating: 0
RE: Boycott MS
By wordsworm on 4/7/2008 6:59:17 AM , Rating: 2
MS never offered $35/share. They offered $17.50 + shares in MS. Here's a nice snippet from Yahoo!
quote:
Furthermore, as a result of the decrease in your own stock price, the value of your (MS)proposal today is significantly lower than it was when you made your initial proposal.
Courtesy of http://biz.yahoo.com/bw/080407/20080407005551.html...

Yahoo is a major threat to both Google and MS. Since it still retains the title as the world's most popular website, it also has a tremendous opportunity for success.

MS is trying to make a steal. That's what Yahoo! board members think. Yahoo is one of the big three. The last thing the Internet needs is that number to be dropped down to two.


RE: Boycott MS
By wookie1 on 4/7/2008 10:46:22 AM , Rating: 2
Yeah, unless: 1) you paid $50 for the stock and think that the market is undervaluing it (so that when it is properly valued it would be worth more), or 2) you think that it is an excellent company that would provide better returns over time than the premium you are getting now.

Also, maybe the CEO and/or board members have a bunch of stock options with a strike price above the offering. All those millions of $ would be wiped out and they would be serfs like the rest of us.


"If they're going to pirate somebody, we want it to be us rather than somebody else." -- Microsoft Business Group President Jeff Raikes

Related Articles













botimage
Copyright 2014 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki