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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RE: Boycott MS
4/7/2008 10:46:22 AM
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.
"We are going to continue to work with them to make sure they understand the reality of the Internet. A lot of these people don't have Ph.Ds, and they don't have a degree in computer science." -- RIM co-CEO Michael Lazaridis
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