Report: Yahoo executives to turn down Microsoft takeover

[AppleInsider]

Yahoo's senior management will refuse Microsoft's unprecedented $44.6 billion bid when it returns to work on Monday, says a new report by the Wall Street Journal.

An insider purportedly familiar with the situation hints that Yahoo's board of directors sees the proposed Microsoft takeover as exploiting a momentarily vulnerability in Yahoo's stock price, hoping to land a relative bargain.

Executives at the search engine company aren't likely to even consider offers below $40 per share -- or about $12 billion more than what's been offered so far, according to the report.

The alleged source in turn states that Yahoo is determined to choose any other option that would allow the company a greater amount of freedom. Although this and most reports suggest that a deal with Google to license ad or search technology is the most likely solution, others have suggested candidates as diverse as Apple or InterActiveCorp, all of whom may have a vested interest in denying Microsoft control of Yahoo.

No matter which firm (if any) accepts the bid, the primary goal is to take a "poison pill" strategy to Microsoft's unsolicited bid, the paper says. By forcing Microsoft to either raise its bid or go through other means to force a deal, Yahoo's refusal will make any bid seem overly aggressive and trigger dissent among the core engineering staff -- and therefore robbing Microsoft of the very employees it wants.

Neither Microsoft nor Yahoo has commented on the apparent decision, which may also face stiff opposition from regulators if the search firm points to the takeover as evidence of monopolistic behavior.

[ View this article at AppleInsider.com ]

[Ireland]

That's good news. I'd rather live in a Google monopoly than an MS one any day anyway.

[quinney]

I am a little surprised that commercial TV networks are not mentioned
as possible bidders. A strong internet presence would give them another
place to sell targeted advertising to their TV sponsors.

[anantksundaram]

I doubt that Yahoo will see $31 per share in a while if they walk away from this. It is, of course, possible that MSFT will increase the price of the offer, but surely even they know that it would be beyond rich.

[NasserAE]

Microsoft trying to buy Yahoo proof of one thing... Steve Jobs remarks on Microsoft years ago in an interview "They don't think of an original ideas and they don't bring much culture into their product"

http://www.youtube.com/watch?v=upzKj-1HaKw

[Kolchak]

Originally Posted by anantksundaram

It is, of course, possible that MSFT will increase the price of the offer, but surely even they know that it would be beyond rich.

I doubt Microsoft can do that. Reports say they were going to have to get a loan to finance the $45 billion takeover. They can't go 20% higher to meet Yahoo's price. $12 billion isn't chump change, even by Microsoft standards.

[Ronbo]

Originally Posted by NasserAE

Microsoft trying to buy Yahoo proof of one thing... Steve Jobs remarks on Microsoft years ago in an interview "They don't think of an original ideas and they don't bring much culture into their product"

http://www.youtube.com/watch?v=upzKj-1HaKw

Of course, pretty much everything they do reminds me of that line.

I know the guys on the board at Yahoo! have a responsibility to their stock-holders and all (though selling seems only a very short-term benefit). But I can understand why they wouldn't want to be absorbed by Microsoft. Ask the guys at Bungie. First thing you'll lose is your ability to pursue projects of your choice.

[jpferreira]

good news! don't wanna see flickr under msf management..

flickr premium album online service for windows vista...

[nvidia2008]

Originally Posted by AppleInsider

...others have suggested candidates as diverse as Apple or InterActiveCorp, all of whom may have a vested interest in denying Microsoft control of Yahoo....

Ha ha... Apple won't be touching this with a ten-foot pole. Though Steve may just buy out Yahoo and shut it down because Flickr f*ed up during the AppleTV part of his Macworld 2008 Keynote presentation.

[Walter Slocombe]

Originally Posted by quinney

I am a little surprised that commercial TV networks are not mentioned
as possible bidders. A strong internet presence would give them another
place to sell targeted advertising to their TV sponsors.

That would require intelligence on the part of the studio execs.

Re the news though, its still unconfirmed.

once its confirmed, my response is pretty much of the [Nelson]HA HA[/Nelson] variety.

[mdotdubz]

I could see why they wanna buy yahoo. I just tried Windows Live search.... horrible! Its like clicking on the 34,836th page on Google or Yahoo!

I do however like their Windows Live Maps (local.live.com) with cool close-up 3/4 Birdseye overhead view. Sick, actually puts Google Maps to shame.

Oh yea, btw... Apple won't waste money on Yahoo... it will however buy Adobe! I'm buying some Adobe stock as soon I get my check!

Then again...maybe, just maybe, if Apple bought Yahoo, they could expand dotMac into a total internet user experience, and finally make it free! It makes sense, accounts would be payed for by ads, the way Yahoo accounts are subsidized now. Can you imagine Apple becoming an internet force like Google? I think it would work. Apple Spotlight search engine, dotMac email accounts, maybe dotMac (.mac) can even become a internet post-script like dotcom (.com), so you would see Adobe.mac or Att.mac for example.

[GQB]

Yahoo's board is virtually required to decline any first offer in order to try to get the best deal possible. MSFT will probably come back at $35/share, and if that's refused, they'll go directly to the stockholder who will insist that the deal go through. The stock-holder end-run could even happen at the $31. The Yahoo stockholders would be idiots to pass on their last chance to make any money off of their moribund stock. The only thing keeping its value at $29 is the MSFT offer itself.

[quinney]

Originally Posted by Walter Slocombe

That would require intelligence on the part of the studio execs.

I forgot

[quinney]

Originally Posted by GQB

Yahoo's board is virtually required to decline any first offer in order to try to get the best deal possible. MSFT will probably come back at $35/share, and if that's refused, they'll go directly to the stockholder who will insist that the deal go through. The stock-holder end-run could even happen at the $31. The Yahoo stockholders would be idiots to pass on their last chance to make any money off of their moribund stock. The only thing keeping its value at $29 is the MSFT offer itself.

All true. I will be expecting a long, nasty battle, with YHOO shareholders
gradually accepting multiply extended tender offers. Corporate officers
and some institutions may hold out for a while, but they will sell out
eventually. This will be destructively distracting for both YHOO and MSFT.

[JeffDM]

Originally Posted by Walter Slocombe

That would require intelligence on the part of the studio execs.

I think NOT buying Yahoo! would be more intelligent than buying them. Even if it makes ads and promotions free, that completely ignores a little term in economics circles called "opportunity cost". To reuse an example used to discuss something else, it's a lot like buying an airline to get salted peanuts.

[joseph_went_south]

MSFT is absolutely stupid for doing this.

If they really have $45 billion to spend, the question is, is a hostile takeover of Yahoo the best use of that money? We could debate this for hours, but I think it's obvious that there are a lot of things MSFT could put that kind of money towards that would be better spent than on a shrinking Yahoo which is inferior to Google in most of the fields in which it competes.

[penchanted]

Originally Posted by quinney

All true. I will be expecting a long, nasty battle, with YHOO shareholders
gradually accepting multiply extended tender offers. Corporate officers
and some institutions may hold out for a while, but they will sell out
eventually. This will be destructively distracting for both YHOO and MSFT.

Agreed! While a tender offer will no doubt succeed in Microsoft acquiring Yahoo, it will also likely put off a large number of the talented employees who do work at Yahoo - what should be the real treasure in the acquisition.

[anantksundaram]

Originally Posted by Kolchak

I doubt Microsoft can do that. Reports say they were going to have to get a loan to finance the $45 billion takeover. They can't go 20% higher to meet Yahoo's price. $12 billion isn't chump change, even by Microsoft standards.

The "$44.6" billion in the current offer is intended to be financed by $22.3 billion in cash-on-hand, and $22.3 billion in MSFT stock. They do not need a loan to finance the takeover.

If any reports said that, those reports are probably incorrect.

[radiospace]

Originally Posted by anantksundaram

The "$44.6" billion in the current offer is intended to be financed by $22.3 billion in cash-on-hand, and $22.3 billion in MSFT stock. They do not need a loan to finance the takeover.

If any reports said that, those reports are probably incorrect.

As reported here, among dozens of other places, Microsoft CFO Chris Liddell states plainly that Microsoft intends to borrow money to help raise the cash necessary to complete the deal.

[SpamSandwich]

As a shareholder of both YHOO and MSFT, I hope Google makes a bid for or alliance with Yahoo instead of it being broken up and sold off to various companies.

[wraithofwonder]

Originally Posted by Kolchak

I doubt Microsoft can do that. Reports say they were going to have to get a loan to finance the $45 billion takeover. They can't go 20% higher to meet Yahoo's price. $12 billion isn't chump change, even by Microsoft standards.

Nonsense, I too read that Microsoft for some inexplicable reason got help financing the matter, but they do have over $90 billion CASH ON HAND.

That said, I will find it amusing a year or two from now when Microsoft ends up buying Yahoo for half of what they offered.

Yahoo screwed up.

[penchanted]

Originally Posted by wraithofwonder

Nonsense, I too read that Microsoft for some inexplicable reason got help financing the matter, but they do have over $90 billion CASH ON HAND.

Not sure where you are getting your information but you are plainly incorrect. Microsoft's cash and short term investments totaled $21,076M as of 12/31/07. Their total currant assets were only $37,775M.

You can review their balance sheet at http://finance.google.com/finance?fs...&q=NASDAQ:MSFT. At ~$7500M, their actual cash on hand is not even close to your $90 billion delusion. Additionally, their total cash and short-term equivalents are, at best, only equal to the cash portion of the offer. No way Microsoft uses all their cash to make a purchase.

[anantksundaram]

Originally Posted by radiospace

As reported here, among dozens of other places, Microsoft CFO Chris Liddell states plainly that Microsoft intends to borrow money to help raise the cash necessary to complete the deal.

Thanks for that. I interpret the article (as well as the CFO) saying saying a "little bit of debt" overall. My guess is that they'll probably want to keep a few billion as cash, so perhaps take on a little bit of debt to cover the difference, and pay that off very quickly (before the year's end, I'll bet) as they bring in tons of new cash in '08 from Windows and Office sales.

In other words, it will still be predominantly cash + stock.