Yahoo responds to Microsoft threat
The Internet firm says it believe the offer substantially undervalues the company, but adds that it is not opposed, in principle to a deal with the software giant
Responding to Microsoft’s threat to lower the bid price, Yahoo on Monday once again rejected the US$44.6bn unsolicited bid from the software giant, indicating that the offer must be raised before any merger can take place.
“The management and most of its investors believe that the offer substantially undervalues the company,” Yahoo said in a statement. However, Yahoo did say that it was not opposed in principle to a deal with Microsoft, provided the current offer is increased.
“As a result of the decrease in your own stock price, the value of your proposal today is significantly lower than it was when you made your initial proposal,” Yahoo CEO Jerry Yang and Chairman Roy Bostock wrote in a letter to Microsoft CEO Steve Ballmer.
On April 5, Ballmer sent a letter to Yahoo, threatening to offer the deal directly to stockholders if the company’s board did not respond by April 26. Ballmer gave Yahoo three weeks to negotiate a takeover or face a proxy battle.
“We consider your threat to commence an unsolicited offer and proxy contest to displace our independent board members to be counterproductive,” Yang and Bostock wrote in the letter to Ballmer.
Microsoft’s original cash-and-stock bid was formally rejected by Yahoo’s board, but the software giant maintained that its offer was fair and that it didn’t plan to sweeten the price. There has been some interaction between management of the two companies, but talks haven’t led to an agreement.
“Steve, you personally attended two of these meetings and could have advanced discussions in any way you saw fit,” Yang and Bostock said in response to Ballmer’s claim that Yahoo has refused to enter into negotiations.
Yahoo is still evaluating alternatives to Microsoft’s offer, which was 62% higher than Yahoo’s stock price at the time of the bid.
“We are open to all alternatives that maximize stockholder value,” Yahoo said in the letter. “This includes a transaction with Microsoft if it represents a price that fully recognises the value of Yahoo on a standalone basis.”
Microsoft offered US$31 per share in cash and stock for Yahoo on January 31. The company rejected the offer on Feb. 11.
Yahoo shares dropped 56 cents to US$27.80 in early trading after closing at US$28.36 on the Nasdaq Stock Market on April 4. Microsoft closed at US$29.16
