Microsoft Says It May Borrow to Acquire Yahoo
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Microsoft said that it might borrow money for the first time in its history to fund a portion of its $44.6 billion unsolicited offer for Yahoo.
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Business & money: Online search firm Yahoo, subject to takeover interest from Microsoft, tells of rival offer from News Corp
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Microsoft's proposal to buy Yahoo for $44.6 billion raises many questions. Will Yahoo accept the offer? Can Microsoft win the approval of antitrust authorities in the United States and the European Union? Can the company digest an acquisition this large without suffering an AOL-Time Warner-like...
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Yahoo Inc insiders are mulling ties to rival Google Inc as a possible defense to rebuff Microsoft Corp's takeover bid, a person familiar with Yahoo management's thinking said on Sunday.
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Microsoft Corp will authorize a  proxy battle for Yahoo Inc this week to convince the Web  company's shareholders to agree on a takeover deal that the  Yahoo board so far has rejected, the New York Times' Dealbook  blog said on Tuesday.
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Yahoo has not reached a decision about&#160;Microsoft&#39;s acquisition offer&#160;and is considering &quot;a wide range of potential strategic alternatives,&quot; Yahoo CEO Jerry Yang said in an e-mail to employees on Wednesday.In the e-mail, which was addressed to &quot;yahoos&quot; and filed with the U.S. Securities and Exchange Commission, Yang said the Yahoo board is still reviewing the deal and will &quot;take the time it needs to do it right.&quot;&quot;Our board is thoughtfully evaluating a wide range of potential strategic alternatives in what is a complex and evolving landscape,&quot; he wrote in the e-mail, typed in all lowercase letters.Microsoft made its unsolicited bid for Yahoo last Friday, offering to pay $44.6 billion for the company, or 62 percent over Yahoo&#39;s closing share price Thursday. The deal would greatly expand Microsoft&#39;s search and advertising business and could help it to compete better with Google online.Yahoo is understood to be lukewarm on the offer. The company hopes a rival suitor will emerge with a counteroffer or that it can forge a deal with Google that will allow it to remain independent, according to Wednesday&#39;s Wall Street Journal newspaper, which cited unnamed sources.However, analysts have said it is unlikely another company could match Microsoft&#39;s sizeable offer, and a business deal between Yahoo and Google could raise antitrust concerns because of Google&#39;s already dominant market position.In the e-mail, Yang thanked the Yahoo staff for staying focused on their work amid the turmoil. The company has hired &quot;top advisors&quot; to assist it through the process and is focused on maximizing value for its shareholders, he said.
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Microsoft plans to intensify its pursuit of Yahoo this week when it authorizes a proxy fight to oust Yahoo&#39;s board, meaning the 19-day old acquisition attempt will soon turn a darker shade of ugly, according to The New York Times.The proxy fight will cost Microsoft between $20 million and $30 million, much less than having to significantly up its offer for Yahoo, The Times reported Tuesday morning, quoting anonymous sources.The aggressive move would be consistent with Microsoft&#39;s statements hinting that it&#39;s willing to acquire Yahoo via hostile means if necessary.&#160;Yahoo&#39;s board rejected unanimously Microsoft&#39;s offer, calling it too low.Yahoo declined to comment about The Times&#39; article. Microsoft didn&#39;t immediately reply to requests for comment.On Feb. 1, Microsoft offered to pay $31 per share for half of Yahoo&#39;s outstanding shares in cash -- about $22.3 billion -- and 0.9509 of a Microsoft share for the other half. Microsoft&#39;s half-cash/half-stock offer to Yahoo was valued at about $44.6 billion at the time it was made; Yahoo&#39;s share price was $19.18 at the time.However, the bid&#39;s value has dropped to about $41 billion as the price of Microsoft&#39;s stock has fallen from $32.60 at the time the offer was made. It was trading at $28.77 on Tuesday morning. At the same time, Yahoo&#39;s stock has surged, erasing the bid&#39;s original premium. It was trading at $29.32 on Tuesday morning.In the proxy fight, Microsoft would hire a proxy solicitor to urge Yahoo investors to kick out board directors, The Times reported, adding that all Yahoo directors are up for nomination this year.After investing heavily in recent years in its Internet business and failing to achieve its desired goals, Microsoft is now convinced that it must acquire Yahoo in order to compete against common rival Google, especially in search advertising, the largest online advertising market pie, and one that Google dominates.As of the end of 2007&#39;s third quarter, Google had almost 25 percent of the U.S. Internet advertising market, up from almost 21 percent in 2006&#39;s third quarter, according to IDC. Meanwhile, Yahoo&#39;s share during this period dropped to 11.3 percent from 12.3 percent, while Microsoft&#39;s declined to 5.2 percent from 5.8 percent, according to IDC.In search usage, Google held a commanding 62.4 percent of queries worldwide, followed by Yahoo in a very distant second place with 12.8 percent, according to comScore. Microsoft ranked fourth with 2.9 percent, after Baidu (5.2 percent).Unquestionably, Yahoo would be a major win for Microsoft in the display ad market. In November, Yahoo ranked first in the U.S. in display ad impressions with a 19 percent share, while Microsoft came in third with 6.7 percent, after News Corp.&#39;s Fox Interactive (16.3 percent), according to comScore. Google took seventh place with 1 percent.However, skeptics question whether acquiring Yahoo will yield the expected benefits, considering the complexity of integrating the two businesses, cultures and technology platforms and the fact that Yahoo has had severe internal problems that have stumped its most seasoned executives. In addition, some aren&#39;t sure that a unified Microsoft/Yahoo will have a better chance to compete against Google.Yahoo co-founder and CEO Jerry Yang, who is also on the board of directors, has been urgently looking for and considering alternatives to a Microsoft acquisition soon after Ballmer and company made their bid.Reports -- all attributed to anonymous sources in various media outlets -- have emerged in the past two weeks that Yang has held conversations with Google, AOL and News Corp., exploring various deals that would allow him to reject Microsoft&#39;s offer.The key is that the shareholder value created by a competing deal would have to at least match the value of Microsoft&#39;s deal. Otherwise, Yahoo would make itself liable to shareholder lawsuits that alleged the board had failed to perform its fiduciary duty.So far, as experts have analyzed the potential value to Yahoo of outsourcing its search advertising to Google, merging with AOL or selling a 20 percent stake to News Corp. in exchange for MySpace, the consensus has been that none of those scenarios comes close to matching Microsoft&#39;s offer.
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Yahoo may team up with News Corp. to fend off&#160;Microsoft&#39;s bid to buy the struggling Web portal, according to a Wall Street Journal report on Wednesday.The two companies are in talks about a deal in which News Corp. would take a stake of as much as 20 percent in Yahoo. MySpace and other Web properties of News Corp. would be combined with Yahoo, according to the report, which was attributed to &quot;people familiar with the matter.&quot;The deal would also involve a cash infusion by News Corp. and a private equity firm. Yahoo would remain independent.On Monday,&#160;Yahoo rejected Microsoft&#39;s $44.6 billion unsolicited buyout bid, saying it undervalued the company. Microsoft has vowed to take all necessary steps to close the deal.A Yahoo spokeswoman declined to comment on the report. News Corp. and Microsoft could not immediately be reached for comment.
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Yahoo and Microsoft would still be the underdog in the increasingly important business of Web search if Microsoft's unsolicited $44.6 billion bid to buy Yahoo is approved by regulators and Yahoo shareholders.
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Microsoft Corp.'s $41 billion takeover bid appears to have backed Yahoo Inc. into a corner, leaving the struggling Internet pioneer with the unpleasant choice of selling to a detested rival or pursuing other agonizing alternatives likely to require the help of an even fiercer foe, Google Inc.
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Microsoft Corp. has offered to buy struggling internet search provider Yahoo for $44.6 billion, a merger that would combine two of the technology world's most well-known names into a potentially potent competitor for Google in the lucrative Web search and advertising market.
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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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With Google Inc.  taking a  dominant lead in the Internet search market, it looks  increasingly likely that Microsoft Corp.  could make a  large acquisition, such as of Yahoo Inc. , Merrill  Lynch said on Friday.
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NEW YORK/SAN FRANCISCO  - Yahoo Inc is reportedly in talks with News Corp to combine their Web properties, but Wall Street analysts rained scorn on the likelihood of a deal that can fend off Microsoft Corp's $42.1 billion bid for Yahoo.
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Yahoo Inc's board believes Microsoft Corp's unsolicited bid of $44.6 billion to acquire Yahoo "massively undervalues" the company and directors are set to reject the offer, the Wall Street Journal reported on Saturday, citing an unnamed source.
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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.In a statement, Microsoft said it&#39;s &quot;unfortunate&quot; that Yahoo &quot;has not embraced&quot; its proposal to combine the two companies, and the rejection of the offer &quot;does not change our belief in the strategic and financial merits of our proposal.&quot;The company also hinted that it may take the offer directly to Yahoo&#39;s shareholders, a move that could result in a hostile takeover.&quot;As we have said previously, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo&#39;s shareholders are provided with the opportunity to realize the value inherent in our proposal,&quot; Microsoft said in its statement.Earlier Monday, Yahoo formally rejected Microsoft&#39;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&#39;s outstanding shares in cash -- about $22.3 billion -- and 0.9509 of a Microsoft share for the other half. Microsoft&#39;s half-cash/half-stock offer to Yahoo was valued at about $44.6 billion at the time it was made; Yahoo&#39;s share price was $19.18 at the time.However, since then Microsoft&#39;s stock has gone down while Yahoo&#39;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&#39;s share price closed at $29.87 Monday; Microsoft&#39;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&#39;s target price -- but in its statement on Monday, the company seemed adamant about keeping the offer as it stands.&quot;We are offering shareholders superior value and the opportunity to participate in the upside of the combined company,&quot; Microsoft said. &quot;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.&quot;Microsoft&#39;s offer to purchase Yahoo is an attempt to join forces and improve both companies&#39; 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&#39;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&#39;s offer as it stands, they said.
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If Yahoo rejects the Microsoft bid and finagles a deal with Google, it could open itself up to a slew of shareholder lawsuits, experts say.