In This Article
30-Second Summary
Headline Links: Microsoft considered hostile takeover of Yahoo; drops bid
Video: ‘Microsoft’s Next Move’
Background: ‘Microsoft Puts Yahoo in $44 Million Bear Hug’
Opinion & Analysis: ‘Now Microsoft “Leaning Toward Hostile” (But Doesn’t Reject $35–$37 Price)
Reference: Hostile takeovers
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Microsoft CEO Steve Ballmer
Microsoft Drops Bid for Yahoo
by
findingDulcinea Staff
In a surprise move, Microsoft CEO Steve Ballmer announced Saturday that the software company is abandoning its bid for Yahoo for reasons of cost and time.
30-Second Summary
Yahoo CEO Jerry Yang was originally insisting on $40 per share as a condition for buyout. Microsoft upped its Feb. 1 bid from $31 to somewhere in the mid-30s.
Yahoo rejected the $31 offer because the search engine firm thought the deal would undervalue the company.
Ballmer announced Microsoft’s pullout in a letter to Yang, which ended with the sentence, “Clearly it’s not meant to be.”
A published report said that Microsoft was “likely” to launch a hostile takeover bid for Yahoo as early as Friday. Ballmer told his employees at a Thursday staff meeting, “I know exactly what I think Yahoo is worth to me. I won't go a dime above, and I will go to what I think it’s worth if that gets the deal done.”
But Ballmer dropped the hostile takeover option late on Friday because “mounting a proxy fight to replace Yahoo's board or take an offer directly to Yahoo shareholders would delay the deal so long that it would make it less appealing,” reported Business Week.
Yahoo’s shares were up $1.86, to $28.67, as of 4 p.m. EDT on Friday, partially out of investor anticipation of a takeover. Microsoft’s price per share was down 16 cents, to $29.24. Both tech stocks are traded on the NASDAQ.
Sanford C. Bernstein analyst Charles di Bona said on Thursday’s edition of the CNBC program, “Power Lunch,” “There is a limit to how much [Microsoft] should pay. The value tender on this stock when they started was in the high teens—$19 per share. What they’ve offered already is a big premium.”
Blodget wrote on Friday that Yahoo CEO Jerry Yang is “playing this brilliantly—brilliantly—but if he turns up his nose at $35” per share and Microsoft pulls out, “Yahoo shareholders are going to storm the Sunnyvale campus with torches and pitchforks.”
Yahoo rejected the $31 offer because the search engine firm thought the deal would undervalue the company.
Ballmer announced Microsoft’s pullout in a letter to Yang, which ended with the sentence, “Clearly it’s not meant to be.”
A published report said that Microsoft was “likely” to launch a hostile takeover bid for Yahoo as early as Friday. Ballmer told his employees at a Thursday staff meeting, “I know exactly what I think Yahoo is worth to me. I won't go a dime above, and I will go to what I think it’s worth if that gets the deal done.”
But Ballmer dropped the hostile takeover option late on Friday because “mounting a proxy fight to replace Yahoo's board or take an offer directly to Yahoo shareholders would delay the deal so long that it would make it less appealing,” reported Business Week.
Yahoo’s shares were up $1.86, to $28.67, as of 4 p.m. EDT on Friday, partially out of investor anticipation of a takeover. Microsoft’s price per share was down 16 cents, to $29.24. Both tech stocks are traded on the NASDAQ.
Sanford C. Bernstein analyst Charles di Bona said on Thursday’s edition of the CNBC program, “Power Lunch,” “There is a limit to how much [Microsoft] should pay. The value tender on this stock when they started was in the high teens—$19 per share. What they’ve offered already is a big premium.”
Blodget wrote on Friday that Yahoo CEO Jerry Yang is “playing this brilliantly—brilliantly—but if he turns up his nose at $35” per share and Microsoft pulls out, “Yahoo shareholders are going to storm the Sunnyvale campus with torches and pitchforks.”
Headline Links: Microsoft considered hostile takeover of Yahoo; drops bid
As a bulwark against a Microsoft hostile takeover, Yahoo is mulling a merger with the online segment of AOL-Time Warner and an advertising venture with Google.
Source: ABC News (AP)
Microsoft is backing away from a Yahoo hostile takeover as it does not want to lose “key Yahoo employees,” reports The Wall Street Journal. A spokesperson for Microsoft had no comment for the newspaper.
Source: The Wall Street Journal (free registration may be required)
Ballmer wrote in his withdrawal letter to Yang, “Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft.” The Microsoft head was concerned that Yahoo’s upcoming deal with Google Ad Sense would be detrimental to Yahoo’s business plan and push out key employees.
Source: Business Week
Video: ‘Microsoft’s Next Move’
Charles di Bona, an analyst at Sanford C. Bernstein, said on CNBC program “Power Lunch” on Thursday, “There is a limit to how much [Microsoft] should pay. The value tender on this stock when they started was in the high teens—$19 per share. What they’ve offered already is a big premium.”
Source: CNBC
Background: ‘Microsoft Puts Yahoo in $44 Million Bear Hug’
Microsoft Corp. publicly disclosed on Feb. 1 that it made an offer to acquire Yahoo for $31 a share, payable in a combination of cash and Microsoft stock. The stock offer was a 62 percent premium on the closing price of Yahoo a day earlier.
Source: findingDulcinea
Opinion & Analysis: ‘Now Microsoft “Leaning Toward Hostile” (But Doesn’t Reject $35–$37 Price)
Henry Blodget of Silicon Alley Insider breaks down yesterday’s back-and-forth jabs between Microsoft and Yahoo. First Microsoft CEO Steve Ballmer made his staff meeting announcement, to which Yahoo head Jerry Yang retorted “that its Google search partnership would be announced within a week. Translation: If you don't want to become even more irrelevant in this business, better pony up.”
Source: Silicon Alley Insider
Reference: Hostile takeovers
When a corporation is publicly traded, it is owned by a large number of institutional and individual stockholders. The corporation's management team reports to its Board of Directors, which is the ultimate overseer and has strict fiduciary duties to the stockholders of the corporation. Corporate directors are protected by a “business judgment rule” that presumes a board's actions are proper if the directors have discharged their duties of loyalty, care and good faith to the corporation. This effectively puts the board in a position to “just say no” when faced with an offer. The law firm of Debevoise & Plimpton offers a publication called “Introduction to Hostile Takeovers.”
Source: Debevoise and Plimpton
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