Yahoo! to! reject! Microsoft! offer!

The board at Yahoo! plans to reject Microsoft's unsolicited $44.6bn takeover offer, the Wall Street Journal reports. Quoting "a person familiar with the situation," the publication states that after a series of meetings over this weekend, the board thinks the software giant's bid "massively undervalues" Yahoo!. Microsoft boss …

[John Navas]

The Board is just trying to get Microsoft to up the price

which I'm sure Microsoft is prepared to do (up to a point). There's no way the Board could stop the Microsoft offer without major risk of a shareholder revolt and subsequent litigation against the Board for failing to fulfill its duty to shareholders, since there's no realistic possibility of Yahoo reaching such a stock price any other way.

[Fazal Majid]

Hostile takeovers

The reason why software companies usually don't do hostile takeovers is because in a hostile takeover the management team of the acquired company is decapitated. That assumes that the management is actually contributing value. Yahoo is a clear illustration of the old adage that fish rots from the head, and decapitating the company would probably improve things, and possibly even employee morale, until they realize they have to migrate from FreeBSD to Windows, that is.

[b shubin]

Public ugliness

Y! is a publicly traded company. the Y! board will have to convince its shareholders that the offer is against the company's best interests. the directors are unlikely to succeed in the current economic climate, and will likely face a lawsuit from at least some their shareholders if they try. Y! will probably accept a sweetened offer, as they have no other options.

MS is publicly held as well, and i am certain that some of their shareholders will want to sue to block the deal, as it will add very little to what MS already does; will cost a huge sum (which the shareholders will likely want distributed as a dividend instead); will be subject to extensive antitrust review, which will likely fail in EU, and maybe in the US as well (though MS owns many politicians here); and will present an ugly integration and migration challenge, for a modest return.

i have yet to see a single compelling argument in favor of this deal, so my conclusion is that The Ballmer really pushed out a cockatrice' egg this time: the worst that can happen to MS is that the deal goes through. move on, people, BillG is gone, nothing further to see here...

[Tim Bates]

Good call

Thank goodness for that. Let's hope MS give up on that idea now.

If MS took over Yahoo, I'd have to rethink my Flickr account. I love Flickr, but if MS owned it, I couldn't use it. Plus I know within a few months it would be raped by MS and hacked into the "Live" stuff.

[Anonymous Coward]

Yahoo!, merge! with! AOL! Instead!

At least there's no need to change AOL's home page!

[Anonymous Coward]

Competition

If MS and Yahoo combine, we, the users of the Internet will be the massive losers both in choice and free facilities.

Too much power in one setup with little alternative - it should and must be stopped or we will have an unstoppable world domination with no incentive to invent new and possibly better products.

As individuals we have no power to stop this merger if it is agreed by boards/shareholders - let us now hope that competition law world wide prevents any party from taking becoming too dominant.

[Anonymous Coward]

Looks reasonably likely to go through

Looking at the share price since the offer came in:

http://finance.yahoo.com/q/bc?t=3m&s=YHOO&l=off&z=m&q=l&c=msft

It would appear that the market thinks that it is going to go through. As soon as the market starts to have any doubt, Yahoo share price should start to sink to its old lows, and Microsoft's start to go back the other way. The fact that this isn't happening makes it likely that shareholders will accept the tender as stands, in which case what the Yahoo board think is pretty irrelevant.

[Steve]

Re: Competition

"As individuals we have no power to stop this merger if it is agreed by boards/shareholders "

So buy a share in each of MS and Y! and vote against it...

[Anonymous Coward]

Merging With AOL Instead?

That makes me think that Yahoo is turning down an opportunity to marry the rich and respected hieress to date a fat chick.

Just because you don't want to marry into money doesn't mean that you have to go and ruin your reputation with Grizelda.

[david gomm]

this deal was overpriced to begin with

the reaction of the Yahoo! board serves to indicate just how out of touch they are with reality, an offer of $44bn represents a huge premium for a company which has no prospects of ever getting near that valuation by itself.

Paris, because she knows when to climb onboard and enjoy the ride

[oxo]

I'm obviously a bit dim..

.. but why didn't M$ buy all the shares it could at $19.20 instead of offering $31..

Paris 'cos she hasn't got a clue either.

[Anonymous Coward]

Wait a minute...

...frankly, I don't see the IT angle here. Should the Reg really be covering this kind of claptrap when there are duffel-bagged dwarven robbers prowling the UK bus lines? I think not.

[Hugh McIntyre]

@ I'm obviously a bit dim..

They probably bought some. Although:

1. There's a limit (30% in the UK IIRC, probably something similar in the US) beyond which you have to make a tender offer to buy everyone else out at at least the current price. Even before that, you need to declare your percentage ownership, perhaps at 10% or so.

2. Buying up a bunch of shares on the quiet is difficult if you want to buy 30%, leading to rumors of a takeover and the price going up. After all, you generally can't buy them all at once, and people start to notice.

3. If they bought 30% of Yahoo and then didn't do a takeover, there's a good chance of not getting their money back when they would then probably want to sell (see point #2.) Especially when unloading 20-30% of the total shares, since the price is very likely to fall, and you can't easily sell them all quickly.