Saturday, April 05, 2008

Microsoft formally informs Yahoo that they remain impatiently patient

Microsoft just sent Yahoo a letter that essentially informs Yahoo that Microsoft remains impatiently patient, but that their patience is wearing thin. Microsoft published the letter from Steve Ballmer to the Board of Directors of Yahoo on the Microsoft PressPass site. I originally read about the letter from a Reuters article entitled "Microsoft CEO sets deadline Yahoo to agree to deal" which I found on Google News. And I originally saw the headline when I got a stock alert when I logged into I will excerpt the salient points directly from the letter:

  • It has now been more than two months since we made our proposal...

  • ...the pace of the last two months has been anything but speedy.

  • ... there has been no meaningful negotiation to conclude an agreement.

  • ... we've seen no indication that you have authorized Yahoo! management to negotiate with Microsoft.

  • ... our proposal is the only alternative put forward that offers your shareholders full and fair value...

  • ... two months of inactivity...

  • ... the public equity markets and overall economic conditions have weakened considerably...

  • ... public indicators suggest that Yahoo!'s search and page view shares have declined.

  • By any fair measure, the large premium we offered in January is even more significant today.

  • We believe that the majority of your shareholders share this assessment, even after reviewing your public disclosures relating to your future prospects.

  • ... now is the time for our respective companies to authorize teams to sit down and negotiate a definitive agreement on a combination of our companies that will deliver superior value to our respective shareholders, creating a more efficient and competitive company that will provide greater value and service to our customers.

  • If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo! board.

  • If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company from our perspective which will be reflected in the terms of our proposal.

  • We think it is critically important not to let this window of opportunity pass.

Note that the letter is to the board and not to management or the current executives.

It is important to note that Microsoft has not yet reduced their bid price. In fact, they have reaffirmed the original bid and are giving Yahoo a generous "window" to contemplate the bid. This is a reasonably "friendly" carrot and stick approach.

Seriously, if no white knight steps forward, Yahoo's board really has no excuse not to agree to the deal and gain more generous non-financial terms than if they stand idle and allow the "window" to close and then watch the "bear hug" proposal go outright hostile.

I know what advice I would give to Yahoo's board, but I honestly cannot fathom what fantasies might be buzzing around in their heads right now. Who knows, maybe they think Apple, Sun, Oracle, Time Warner, Rupert Murdock, and the Chinese Government will join forces and "rescue" them from The Evil Empire. Or maybe they are working on a plan to auction themselves off on eBay.

-- Jack Krupansky


At 8:55 PM EDT , Anonymous Allan said...

I agree; if Yahoo! really should be more valuable and expensive, there would be competing offers aplenty.


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