Microhoo Takeover Battle Rages On
Posted: April 7th, 2008
Today, the press and blogosphere learned that Microsoft’s CEO had sent a public letter to Yahoo’s Board of Directors last Friday, with a three week time-frame for them to come to a buyout agreement. The letter essentially attempts to justify the initial offer of $44.6 billion , and threatens to take the offer directly to shareholders and potentially eliminate Yahoo’s current board. Below is just an excerpt, but you can read the entire letter here .
It has now been more than two months since we made our proposal to acquire Yahoo! at a 62% premium to its closing price on January 31, 2008, the day prior to our announcement. 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.
[...]
If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo! board.
A quick audit of potential outcomes for Yahoo yields this as the likely candidate: Microsoft buys Yahoo with a sale price close to the initial bid offer. The 60%+ premium offer by Microsoft is quite generous and even more so now that Yahoo has put some decent severance packages in place.
The other major possibility left is that a third party purchases Yahoo for appreciably more. This isn’t as likely since the $44.6 billion offer is quite generous. Also keep in mind that the list of potential buyers is slowly shrinking and is down to maybe Google or eBay. AOL has been removed from the shortlist after its $850 million acquisition of Bebo last month.
Regardless of how or when Microsoft buys Yahoo, noticeable hostility exists between the two companies beyond the usual "competitor" mentality. The "anything but speedy" comment above is a credit to that, and the consolidation of both companies will be anything but smooth. Google will still have at least a few more years before Microhoo becomes a credible threat.
44.6 billion is a lot of money. From what I’ve been reading Yahoo is in decline anyway, so they might as well get it over with. I don’t think I’d be able to use Yahoo anymore if Bill Gates’ face ends up next to the search box though…too creepy
Gah. It was bad enough the way Yahoo bought out half the internet. I am not a fan of the attitude of entitlement that Microsoft tends to exhibit. I don’t think this is a good plan…