Yahoo! Rejects Microsoft Again
On April 5, Microsoft sent Yahoo an ultimatum to enter buyout negotiations or suffer a prolonged proxy contest for control. Less than 48 hours later, Microsoft received a response: sweeten the offer.
Refuting Microsoft's claims that Yahoo was avoiding a takeover offer and that shareholders were interested in an agreement with Microsoft, CEO Jerry Yang wrote, "Contrary to statements in your letter, stockholders representing a significant portion of our outstanding shares have indicated to us that your proposal substantially undervalues Yahoo." (Source: shareholder.com)
However, Yang is not entirely closed to a union, stating "we are steadfast in our commitment to choosing a path that maximizes stockholder value and we will not allow you or anyone else to acquire the company for anything less than its full value."
As the struggle rages on, it may be the shareholders themselves who decide the future of the company. If Microsoft attempts to install a board of directors through a proxy contest, some experts believe Yang may find himself left out in the cold as other important shareholders are reportedly supportive of the takeover offer. (Source: nypost.com)
Microsoft has set April 26 as a deadline for Yahoo to enter negotiations, after which CEO Steve Ballmer intends to begin hostile takeover proceedings. However, things may take a decisive turn a few days prior on April 22 when Yahoo is expected to announce its first quarter earnings -- a report which will be closely examined to scrutinize the company's health.
Yang has claimed the Internet portal is on track to meet its projected earnings, but whether they exceed or simply meet these projections could be a deciding factor for some shareholders.
In another turn of events, Yahoo announced on Wednesday that it would enter a trial partnership with Google's AdSense to display advertisements alongside Yahoo's search results.
Microsoft responded quickly to this announcement by raising antitrust concerns. "Any definitive agreement between Yahoo! and Google would consolidate over 90% of the search advertising market in Google's hands," company lawyers said. (Source: microsoft.com)
While Google is unlikely to compete with Microsoft for the acquisition of Yahoo, a partnership with the champion of Internet search advertising may help Yang stave off Ballmer's advances.