Now is the time, Yahoo told
2008-04-07 06:56
Seattle/San Francisco - Yahoo Inc has
three weeks to accept Microsoft Corp's $31 per share
cash-and-stock offer or Microsoft may lower its bid and seek to
win over Yahoo shareholders directly, Microsoft said on
Saturday.
Microsoft Chief Executive Steve Ballmer said in a letter
dated April 5 and addressed to Yahoo's board of directors that "now is the time" to negotiate final terms of a deal, which, valued at more than $40bn would mark the biggest-ever takeover in the high-tech industry.
"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," Ballmer wrote.
Then he threatened to reduce Microsoft's offer if Yahoo
fails to meet the deadline: "That action will have an
undesirable impact on the value of your company from our
perspective which will be reflected in the terms of our
proposal."
The letter represents the tightening of the noose in a
classic Wall Street takeover bear-hug strategy, wherein
Microsoft aims to convince Yahoo's board to negotiate a
friendly merger deal or else face a battle to defend their jobs
at Yahoo's next annual meeting.
Yahoo's board is reviewing the letter, said a person close
to the company. Directors of the Sunnyvale, California-based
company have rebuffed Microsoft's original offer, saying the
bid undervalues Yahoo and that it is seeking alternatives.
Ballmer said Microsoft is growing impatient more than two
months after the Redmond, Washington-based software powerhouse
made its unsolicited takeover offer for Yahoo. At the time, the
bid represented a 62% premium to Yahoo's share price.
"Steve Ballmer is an emotional guy and the emotion comes
through and it's frustration," said Kim Caughey, senior analyst at Fort Pitt Capital Group, a Microsoft shareholder. "I really don't think it's going higher than $31. That ship has sailed."
Internet marches on
The Microsoft letter argues that the economy and the market
for internet stocks have deteriorated in the intervening
period, and that Yahoo's share of web search and advertising
business has declined, referring to industry market reports.
"During these two months of inactivity, the internet has
continued to march on, while the public equity markets and
overall economic conditions have weakened considerably,"
Ballmer wrote.
The deadline falls on April 26, four days after Yahoo and
two days after Microsoft report their quarterly results.
Ballmer noted that the Yahoo's board, despite its efforts,
has failed to woo a competing offer from "others in the
industry".
Yahoo has held talks with News Corp and Time Warner Inc's
AOL division about possible deals, but these discussions appear
to have yielded nothing yet.
A Yahoo investor, whose firm met with Yahoo management
earlier this week and declined to be identified, said the
company emphasised the deal with Microsoft involves regulatory
risks that would undercut a merger's potential value.
The management, according to the investor, presented
alliances with AOL and Google as possibly better options.
Meanwhile, Yahoo has adopted measures that make a merger
with Microsoft more costly, Ballmer complained.