Yahoo!'s board of directors formally rejected Microsoft's offer of $44.6 billion for the company this afternoon, citing the proposed sum as too low.According to the BBC, Yahoo! claims that the offer from Microsoft "substantially undervalues" the company and it is therefore against the shareholders' interests to accept the bid.
The outcome of the Yahoo!/Microsoft tangle, which has had chins wagging since the software giant put its offer on the table ten days ago, is unlikely to come as a surprise to analysts. Reports have been rife over the past weekend that Yahoo!'s directors came to the decision to reject Microsoft's offer at a company meeting on Friday 8th February.
When Microsoft's offer was made on February 1st, the company was offering $31 per share for the search engine pioneer - 62% above the level at which its stocks were trading that day. However, since then, Yahoo! has seen its share prices rise above $31 as a result of Microsoft's interest and rabid speculation about the future of the company.
The Wall Street Journal revealed a source close to Yahoo!'s board as stating that the company would probably not consider an offer below $40 per share - even though Yahoo!'s shares have not traded above $40 for two years.
The news is likely to please Google, its main search competitor, who expressed its anxieties over a Microsoft takeover of Yahoo! only a few days after the bid was placed. David Drummond, a Senior Vice President at Google, posted the company's misgivings on the Official Google Blog, stating:
"Could the acquisition of Yahoo! allow Microsoft - despite its legacy of serious legal and regulatory offences - to extend unfair practices from browsers and operating systems to the internet?... Could a combination of the two take advantage of a PC software monopoly to unfairly limit the ability of consumers to freely access competitors' email, IM, and web-based services? Policymakers around the world need to ask these questions - and consumers deserve satisfying answers."
Recent bigmouthmedia reports have highlighted Yahoo!'s many business possibilities, which include an alliance with Google and the possibility that Yahoo! may restart merger talks with AOL.
But many industry experts believe that Microsoft is still likely to come up with a new and improved offer for Yahoo!. Ian Maude from Enders Analysis is quoted by the BBC as stating:
"This is so important from Microsoft's perspective there's a very good chance there will be more money on the table... The strategic logic is in the online ads market. It would make them a must stop destination for any company when considering its advertising plans."
