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Yahoo! rejects Microsoft’s $44.6 billion takeover offer for being ‘too low’

12-February-2008
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Yahoo! rejects Microsoft’s $44.6 billion takeover offer for being ‘too low’

Yahoo! Inc on February 11, 2008 rejected the $44.6 billion takeover offer from Microsoft Corp for being ‘too low’, setting up a potential showdown with the world’s largest software maker. Yahoo! Board of Directors, after reviewing Microsoft’s unsolicited proposal, concluded that the $31-per-share offer was not in the best interests of Yahoo! and its stockholders and “substantially undervalues” the company.

An official communiqué from Yahoo! Inc, stated, “After careful evaluation, the Board believes that Microsoft’s proposal substantially undervalues Yahoo!, including, our 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 Board of Directors is continually evaluating all of its strategic options in the context of the rapidly evolving industry environment. Yahoo Inc! will remain committed to pursuing initiatives that maximise value for all stockholders.”

However, according to industry experts, Microsoft might not be ready to give up. Together, Microsoft and Yahoo would control more than a quarter of the market for animated ads and colorful display banners at the top of Web pages. Google hasn’t made much progress there, giving the combined company a way to challenge Google and start going after emerging markets such as mobile-phone ads.

Goldman, Sachs & Co, Lehman Brothers and Moelis & Company are acting as financial advisors to Yahoo, while Skadden, Arps, Slate, Meagher & Flom LLP are acting as legal advisor to Yahoo! Law fir Munger Tolles & Olson LLP is acting as counsel to the outside directors of Yahoo!

Also read:

International: Microsoft offers to buy Yahoo! for $44.6 billion; Yahoo! Board to evaluate proposal

Google and Microsoft lock horns over multi-billion dollar Yahoo! Deal

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