B.E.T.A. Daily » Offer

Yahoo Responds To Microsoft; Better Offer Or No Deal

Vikrant — Mon, 07 Apr 2008 12:07:38 +0000

Amidst lots of guess work from the blogosphere about how will Yahoo respond to Microsoft, a letter has been sent out to Microsoft from the Yahoo’s Board of Directors and CEO Jerry Yang.

As anticipated by the blogosphere, the letter mentions that:

They will not let Microsoft acquire the company at this value
Yahoo is important for Microsoft both strategically and from products point of view
Yahoo is not opposed to the deal but the offer is not in the interest of the stockholders
The three-year financial and strategic plans along with the Q1 and full year guidance shows that Yahoo is on growth track and the offer undervalues Yahoo’s financials
Launch of AMP!, the new advertising management platform, and other new products show that Yahoo is in-line with its strategic plan and growth commitments to its stockholders.
Decline in Microsoft’s own share prices has significantly reduced the value of the offer in today’s date
Microsoft has not provided information on the regulatory issues related to this deal as requested by Yahoo
The threat of proxy contest is counterproductive and inconsistent with Microsoft’s claims of a friendly transaction and the board has full trust that the stockholders will support them if the proxy contest happens.
Make a better offer which is superior to the available alternatives

Some of the points mentioned by Yahoo do make sense like the unfriendly approach to the deal and the importance of Yahoo for Microsoft to take a leadership position in search advertising and other web services. At the end, if the board has belief in the shareholders and shareholders have faith in Yahoo’s performance, Microsoft will not not be able to acquire Yahoo at this price. I think Microsoft will approach Yahoo with a better deal as they need Yahoo.

Microsoft Screws Yahoo Board’s Weekend; Gives Three Weeks To Decide

Vikrant — Sat, 05 Apr 2008 20:06:57 +0000

Steve Ballmer, on behalf of Microsoft, has sent out a letter to Yahoo’s Board of Directors to expedite the process of making a decision giving out a three weeks notice for them to decide on the offer or face problems.

The main points mentioned in the letter by Ballmer proving that the Microsoft’s offer is a great deal for Yahoo and they should take a speedy action are:

1. The premium value of 62% on the date of offer is really high and will deliver fair value to Yahoo’s shareholders for selling their stocks.

2. The market and economic conditions have weakened making the offer a timely one for Yahoo to accept.

3. Yahoo’s search and page view shares have declined in the last two months.

It is stated in the letter that the board should make its decision in the coming three weeks failing which Microsoft will directly reach out to shareholders and might initiate a proxy contest to elect alternate slate of directors.

Here is the full copy of the Microsoft’s letter to Yahoo’s board of directors.

Alibaba looking for investors to buy Yahoo’s stake

Vikrant — Wed, 19 Mar 2008 15:36:22 +0000

According to Reuters, Alibaba.com is seeking investments to buy out Yahoo’s stake in the company. Yahoo had merged its Chinese operations with Alibaba in 2005 and got a 39% stake in return.

The move by Alibaba is an indicator of two facts:

Alibaba believes that Microsoft will be able to acquire Yahoo.

Alibaba is not in favor of the deal and would prefer independence in case the deal goes through.

The company seems to have a “Right of First Offer” to buy Yahoo’s stake which will be exercised if Microsoft is able to acquire Yahoo.