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Yahoo to reject Microsoft bid PDF Print E-mail
Tuesday, 12 February 2008

Agence France-Presse . San

Internet giant Yahoo’s board has decided to reject Microsoft’s 44.6 billion dollar takeover bid, an informed source told AFP Saturday. The source confirmed an earlier Wall Street Journal report that Yahoo’s management believes the Microsoft offer, which would bring together two top names in online computing, massively undervalues Yahoo.

The Journal said Yahoo’s board also believes the Microsoft offer, at 31 dollars per share, does not account for risks facing Yahoo if it pursues a deal that might be ultimately blocked by government regulators. ‘Yahoo’s board believes that Microsoft’s is trying to take advantage of the recent weakness in the company’s share price to ‘steal’ the company,’ the newspaper said on its website, citing an unnamed source. ‘Yahoo’s board appears to be betting that Microsoft doesn’t want to ‘go hostile’ and try to acquire the company against the wishes of management and the board,’ it said.

A person knowledgeable with the situation told AFP that the Journal report was generally in line with the Yahoo board’s intentions. ‘Reports lacked some facts, but they are not totally off-mark,’ the person said, requesting anonymity. ‘You can expect that Monday will be the day that the board responds.’ On February 1 Microsoft unveiled its 44.6 billion dollar offer to take over Yahoo, in an effort to merge the world’s biggest software company with a major Internet player to take on search and advertising juggernaut Google. Microsoft proposed 31 dollars per share to Yahoo’s board, a 62 per cent premium above its closing price the previous day. Microsoft said a combination of the companies would lead to cost savings of a billion dollars per year.

But Yahoo chief executive Jerry Yang sent a message to employees on Wednesday, assuring them the firm’s leaders were exploring ways to avoid a Microsoft takeover. ‘Our board is thoughtfully evaluating a wide range of potential strategic alternatives in what is a complex and evolving landscape,’ Yang wrote in the email. ‘What’s become clear in the past few days is how much people care about this company. I’ve heard from many of you, and from other friends and colleagues from around Silicon Valley and across the globe, that we need to do what’s best for Yahoo and our shareholders.’ Google earlier condemned Microsoft’s effort as an attack on the very independence of the Internet.

‘Microsoft’s hostile bid for Yahoo raises troubling questions,’ said David Drummond, Google’s senior vice president for corporate development and chief legal officer, in a statement Sunday. ‘This is about more than simply a financial transaction, one company taking over another. It’s about preserving the underlying principles of the Internet: openness and innovation.’ Analysts say the goal of the takeover is to better compete with Google, whose dominance of Internet advertising, backed by its powerful search engine technology, has come at both Microsoft’s and Yahoo’s expense.

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