D-day for Yahoo
2008-04-26 14:07
San Francisco - Microsoft's unwanted courtship of Yahoo hits a critical point on Saturday as a deadline arrives for the struggling internet pioneer to accept the software giant's $44.6bn takeover offer.
Microsoft and Yahoo have duelled through public comments, letters and blog postings since Microsoft announced what it touts as a fair bid for Yahoo on February 1.
Yahoo's board of directors rejected Microsoft's $31 a share offer, saying it "substantially undervalues" the California firm; they insisted their company is worth at least $40 a share.
Microsoft is eager to merge resources with Yahoo to take on Google, which dominates an internet search advertising market expected to grow to $80bn annually worldwide in the next two years.
Founded by Jerry Yang and David Filo in 1994, Yahoo is a distant second in that market to Google, which would still hold an impressive lead over a combined Microsoft-Yahoo entity.
Microsoft chief financial officer Chris Liddell said on Thursday that the US software giant is standing by its bid for Yahoo and the April 26 deadline.
"With respect to Yahoo we have been clear: speed is of the essence," Liddell said.
'We will explore our alternatives'
"The idea we should increase our bid just because we can afford to is not one that I favour. Unless we make progress with the Yahoo board by this weekend, we will explore our alternatives."
Microsoft's options include withdrawing its offer or taking it directly to shareholders in a hostile proxy battle.
Liddell's comments echo those made by Microsoft chief executive Steve Ballmer earlier in the week.
"We have a strategy for the internet that we are very excited about," Ballmer said.
"We think we can accelerate our strategy by buying Yahoo and we will pay what makes sense for us to pay for our shareholders."
Microsoft's proposal is seen as far more than a pure business decision at Yahoo, which prides itself on a quirky, fun style that it fears would be crushed under the corporate feet of the world's largest software maker.
Yahoo shunned negotiations with Microsoft and instead searched for a tie-up with a "white knight" that might save it from the Redmond, Washington, company's clutches.
'Yahoo has a hard decision to make'
Yahoo reportedly looked into an alliance with online social networking website MySpace owned by Rupert Murdoch's News Corporation as well as a partnership with Time Warner's faded internet star America Online.
Yahoo even tested letting Google handle placing online advertising on Yahoo's own search pages to determine whether it generates more money than Yahoo's new Panama online ad platform.
Analysts believe that Google only benefits while Yahoo and Microsoft are distracted by the takeover quest.
Google has steadily increased its share of the online search market and Yahoo is said to be losing value as workers leave for jobs elsewhere to avoid becoming part of the Microsoft machine.
On April 5 Ballmer told Yahoo it had three weeks to decide whether to accept the offer.
"Yahoo has a hard decision to make," Silicon Valley analyst Rob Enderle told AFP. "They have to call Microsoft's bluff and if Microsoft isn't bluffing and this goes hostile, it is going to be expensive for both companies."