February 12 2008
Yahoo rejects Microsoft bid
Yahoo's board has finally rejected Microsoft's bid to take over the company.
The Yahoo board of directors has issued a statement stating it has unanimously decided against accepting Microsoft's "unsolicited offer" because it is not in the interests of the company or its shareholders, but they haven’t said no to the offer, and it looks like this could run and run.
The Yahoo statement claims the Microsoft offer - a $44.6bn (£22.4bn) bid on 1 February - substantially undervalued the company. Microsoft has offered $31 (£16.02) a share which was a substantial increase on Yahoo’s then share price of $19.18 (£9.91). After the bid Yahoo’s share price rocketed and is currently (11th Feb) at $29.87 and rising.
The statement claimed that this offer failed to value the "global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments."
The value of Microsoft’s offer has dropped to about $41.6 billion because Microsoft's shares have fallen 13.5% since the 50-50 cash-stock proposal was announced.
Analysts say they expect Microsoft to push for formal talks, and many expect it will raise its offer. Yahoo is looking for a purchase price closer to $40 a share, says Kevin Buttigieg, an analyst with Stanford Group. Because Microsoft wants to close the deal quickly, it's likely to overpay, he says.
We’re taking no sides, but we just wish they would get on with it so we can get back to reporting interesting things. We’re also having problems thinking of witty names for the new combined giant, although we were quite happy with the potential onomatopoeic nature of Microhoo.
