Major Yahoo investor urges Microsoft to raise offer
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BOSTON/SEATTLE  - Yahoo Inc's  second-biggest shareholder urged Microsoft Corp  to raise its $42 billion bid for the Web pioneer and warned Yahoo it has few options other than to accept, raising pressure for them to seal a deal.
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Microsoft Corp offered  to buy Yahoo Inc for $44.6 billion, in a bold bid to transform  two ailing Internet businesses into a worthy competitor for  market leader Google Inc.
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Microsoft Corp  said on Friday  it has offered to buy Yahoo Inc , the popular Web  portal, for $44.6 billion in cash and stock, seeking to join  forces against Google Inc  in what would be the biggest  Internet deal since the Time Warner-AOL merger.
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In a letter to Yahoo&#39;s board, Microsoft CEO Steve Ballmer&#160;offered to acquire the company&#160;for a per-share price of $31 in cash or 0.9509 of a share of Microsoft common stock -- a 62 percent premium above the Jan. 31, closing price of Yahoo -- and cited the broad range of ways in which the companies might work together to create a more effective competitor in the online marketplace. Below is the text of the letter that Microsoft sent to Yahoo&#39;s Board of Directors:
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Confirming&#160;weekend rumors, Yahoo rejected on Monday&#160;Microsoft&#39;s $44.6 billion cash-and-stock offer, saying the unsolicited proposal substantially undervalues the company.In a statement, Yahoo said that its management team, along with financial and legal advisors, believe the offer doesn&#39;t reflect cash flow, earnings potential, or recent investments in its advertising platform.Further, Yahoo said its board would continue to&#160;evaluate other &quot;strategic options.&quot;&#160;[&#160;See related Special Report:&#160;Microsoft makes bid for Yahoo&#160;| Blog:&#160;&#160;Yahoo + Microsoft: What&#39;s love got to do with it?&#160; ]&quot;We remain committed to pursuing initiatives that maximize value for all stockholders,&quot; the statement said.Microsoft offered $31 per share on Feb. 1, which was a 62 percent premium over Yahoo&#39;s closing price the day before. Since then,&#160;Yahoo&#39;s stock has risen in value&#160;and was trading just above $29 on Monday morning.Yahoo&#39;s executives were rumored to have been searching for a buyer other than Microsoft. However, no buyer has emerged. Yahoo&#39;s latest moves mean that Microsoft may have make a more generous offer, or pursue a hostile takeover.Microsoft said it believes the acquisition of Yahoo would give it the engineering talent and resources to compete better with Google. While Microsoft and Yahoo have had some success with display advertising, Google has built a fortune on contextual text ads that appear during a search.
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Now that Yahoo is apparently in play, and talk among Wall Street Insiders touches on big names such as Google, Amazon, and AOL, Yahoo apparently feels all the talk has elevated its value high enough where it can afford to say no to Microsoft.
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Microsoft said&#160;its $44.6 billion offer to purchase Yahoo&#160;is &quot;fair&quot; and hinted that it may pursue a hostile takeover of the Internet company, according to a statement Microsoft made Monday in response to&#160;Yahoo&#39;s formal rejection of its buyout offer.
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Yahoo&#39;s board of directors plans to reject&#160;Microsoft&#39;s unsolicited $44.6 billion takeover bid,&#160;The Wall Street Journal reported Saturday, citing as its source &quot;a person familiar with the situation.&quot;According to the report, the source said the Yahoo board has determined that the $31-per-share offer &quot;massively&#160;undervalues&quot; the online services company. In addition, Microsoft&#39;s buyout bid doesn&#39;t take into consideration the business risks that Yahoo would be taking if it entered into an agreement that in the end might not be approved by government regulators, the source told the Journal.According to the Journal, Yahoo&#39;s board intends to send Microsoft a letter on Monday, detailing its position.A Yahoo spokeswoman declined to comment on the report today. &quot;We are not providing details on the board&#39;s review process,&quot; she wrote. &quot;Yahoo&#39;s board is carefully and thoroughly evaluating the Microsoft proposal in the context of all of the company&#39;s strategic alternatives, and will pursue the best course of action to maximize long-term value for shareholders.&quot;Microsoft, which announced its offer for Yahoo on Feb. 1, couldn&#39;t be reached for comment today. The offer is a combined cash-and-stock deal; in announcing the bid, Microsoft said Yahoo shareholders could choose to receive either cash or Microsoft stock, although it added that the total consideration would be equally split between the two forms of payment.Yesterday, published reports said that Yahoo&#39;s board was meeting to discuss the offer.Yahoo is still evaluating other options,&#160;including a search advertising partnership with Google, according to today&#39;s report by the Journal. It also may still be open to a longer negotiation with Microsoft: The Journal said it was told by the source that Yahoo would be unlikely to consider any offers below $40 per share.If so, that would require Microsoft to raise its original offer by at least 29 percent, or about $13 billion. In other words, the cost for Microsoft to become a more credible rival to Google in the search and online advertising markets could start at about $57.6 billion.Google has been doing what it can to scuttle the Microsoft takeover bid, including playing the antitrust card by asking, in a blog post by one of its executives last Monday, whether Microsoft might &quot;attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC?&quot;Microsoft quickly shot back, issuing a statement saying that a combination of it and Yahoo merger would &quot;create a more competitive marketplace.&quot;(Eric Lai contributed to this story.)Computerworld is an InfoWorld affiliate.
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Microsoft Friday unveiled a bid of 44.6 billion dollars for Yahoo in an effort to merge the world's biggest software company with a major Internet player to take on the Google juggernaut.
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Yahoo Inc's board met by telephone on  Friday and discussed strategy for getting Microsoft Corp to  raise its $42 billion offer for the company and the possibility  of hiring Google Inc to run Yahoo's search, the Wall Street  Journal said.
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Microsoft was urged to raise its $42 billion bid for the Internet company and warned Yahoo that it has few options left.
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InfoWorld - Microsoft has offered to buy Yahoo for around $44.6 billion in cash and shares, to better compete with Google in the market for online services.
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Yahoo Inc's  board of  directors is to meet on Friday to discuss Microsoft Corp's   $44.6 billion buyout offer, the TechCrunch blog said,  citing unnamed sources.
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Most of Yahoo Inc's top institutional shareholders may be more interested in making sure Microsoft Corp does not overpay for the Web pioneer, because they have more money invested in the bigger software maker, a research report said on Friday.
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Microsoft's CEO tells financial analysts that the company has a plan to take on its major rival. Yahoo could speed up the plan, but it will build its ad business, regardless.
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In what may be a sign that its investor base is growing restless, Yahoo sent a letter from its chief executive, Jerry Yang, to shareholders Wednesday explaining the Web company's decision to turn down a takeover offer from Microsoft and laying out its turnaround strategy. The letter went well beyond Mr. Yang's previous e-mail to Yahoo [...].
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Internet search firm Yahoo   could see its shares rise sharply in the coming year as  investors pay greater heed to its array of money-making  services, Barron&#039;s said in its May 22 edition.