14 July 2008

Yahoo! rejects "ludicrous" new offer from Microsoft

Yahoo! released a statement yesterday, in which the company criticised the latest takeover bid from Microsoft and Carl Icahn, a proposal that would have led to Microsoft owning Yahoo!'s search engine with Carl Icahn purchasing the rest of the business.

Yahoo! objected to being given 24 hours to consider the offer and there being no opportunity to negotiate the terms of the deal, which would have involved the immediate removal of the Yahoo! board and top management if it had been successful.

In a strongly worded statement, Yahoo! said "It is ludicrous to think our board would accept such a proposal. While this type of erratic and unpredictable behaviour is consistent with what we have come to expect from Microsoft, we will not be bludgeoned into a transaction that is not in the best interests of our stockholders"

In the statement, Yahoo! chairman, Roy Bostock, added: ""This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo!'s stockholders in mind."

This is the third offer Microsoft have made to buy Yahoo! this year, with the first one coming in January, when Microsoft attempted to buy the whole company. After months of negotiation, Microsoft pulled the offer in May. A second offer came in June, while Yahoo! was negotiating a paid search deal with Google. Although Microsoft just wanted Yahoo!'s search assets on this offer, Yahoo! chose to work with Google instead and keep its own search business, feeling that the commercial agreement with Google has superior financial value and less complexity and risk than the Microsoft proposal.

The statement from Yahoo! repeated the offer to sell the entire company to Microsoft for at least $33 a share (Microsoft originally offered $31 a share), suggesting that a takeover of the company would be much simpler than the proposed restructuring.

The latest offer comes just weeks before Yahoo!'s August annual meeting where Mr Icahn, who owns about 5% of Yahoo!, will try to replace the board with his own slate of directors. Microsoft have said that it is no longer interested in negotiating with the current directors but will enter into talks should a new board be in place in August.