Ballmer To Yahoo: Join Within 3 Weeks or Suffer
April 6, 2008 3:00 PM
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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
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
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,
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This proposed acquisition is as stupid as.....
4/7/2008 2:46:09 AM
.. AMD's acquisition of ATi. Just as with that disastrous ATi acquisition, the timing is off by about a year or so. With the looming recession, Yahoo's business will fall off markedly, while Microsoft currently sits on a huge bundle of cash - implicit recession-proofing. In about a year Microsoft could pick up Yahoo for a song. Now Microsoft will throw away that great cushion of cash -- for what ? Why not just hire away the best brains in Yahoo, and if necessary pay them handsomly to do nothing for a year or two if there is any prospect of litigation over trade-secrets? Yahoo is just a software company.. it manufactures nothing tangible. Hire away the brains and they are dead.
RE: This proposed acquisition is as stupid as.....
4/7/2008 9:48:45 AM
You can hire away the brains but you can not hire away the IP rights, trademarks, and brand usage.
So, essentially, you'd have to start from scratch. If you buy Yahoo outright, then you own everything and the next day people are visiting Yahoo's site, which is owned by you.
I don't want the merger to happen though :( I feel like it'd be selling my friends child to an army of hell-bent intergalactic empire wishing nothing more than to force everyone to submit to their will.
“And I don't know why [Apple is] acting like it’s superior. I don't even get it. What are they trying to say?” -- Bill Gates on the Mac ads
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