Microsoft hints at Yahoo hostile takeover

Microsoft said its offer to acquire Yahoo is "fair" and hinted that it may even attempt a hostile takeover of the company.

Microsoft said its $US44.6 billion offer to purchase Yahoo is "fair" and hinted that it may pursue a hostile takeover of the Internet company, according to a statement Microsoft made Monday in response to Yahoo's formal rejection of its buyout offer.

In a statement, Microsoft said it's "unfortunate" that Yahoo "has not embraced" its proposal to combine the two companies, and the rejection of the offer "does not change our belief in the strategic and financial merits of our proposal."

The company also hinted that it may take the offer directly to Yahoo's shareholders, a move that could result in a hostile takeover.

"As we have said previously, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!'s shareholders are provided with the opportunity to realize the value inherent in our proposal," Microsoft said in its statement.

Earlier Monday, Yahoo formally rejected Microsoft's bid to acquire the company in a half-stock/half-cash purchase, saying it undervalued Yahoo.

On Feb. 1, Microsoft offered to pay $31 per share for half of Yahoo's outstanding shares in cash -- about $22.3 billion -- and 0.9509 of a Microsoft share for the other half. Microsoft's half-cash/half-stock offer to Yahoo was valued at about $44.6 billion at the time it was made; Yahoo's share price was $19.18 at the time.

However, since then Microsoft's stock has gone down while Yahoo's has risen, making the deal, under its current terms, worth less than when it was originally offered. This led to speculation that Yahoo might look for other suitors; the company is reportedly looking for about $40 per share. Yahoo's share price closed at $29.87 Monday; Microsoft's closed at $28.21.

Some have speculated that Microsoft would raise its offer to the company to about $35 per share -- about midway between its original offer and Yahoo's target price -- but in its statement on Monday, the company seemed adamant about keeping the offer as it stands.

"We are offering shareholders superior value and the opportunity to participate in the upside of the combined company," Microsoft said. "Based on conversations with stakeholders of both companies, we are confident that moving forward promptly to consummate a transaction is in the best interests of all parties."

Microsoft's offer to purchase Yahoo is an attempt to join forces and improve both companies' positions against Google in online advertising and services. However, many questioned both the logistical complexity and cultural differences involved in combining the companies, and there are fears that it will thwart rather than help their efforts to compete with Google.

Yahoo is reportedly in talks with both AOL and Google to try to avoid being acquired by Microsoft. Analysts said Monday that Yahoo's initial rejection of the offer is more of an attempt to elicit a higher bid -- either from Microsoft or another company. If none comes, the company might decide in the future to accept Microsoft's offer as it stands, they said.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Elizabeth Montalbano

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?