Yahoo! Says No To Microsoft

Last week’s Big News was about Microsoft’s 44.6-billion dollar bid to buy Yahoo! so that they can both take on Google. This week revealed Yahoo!’s reply: no. Excerpts from the press release:

After careful evaluation, the Board believes that Microsoft’s proposal substantially undervalues Yahoo! including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments. The Board of Directors is continually evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximize value for all stockholders.

“Substantially undervalues” sounds like Yahoo! thought that the price was too low. Thinking that my interpretation could be wrong, I looked it up. Here’s what Between the Lines had to say:

Translation: Yahoo is receptive to another offer should Microsoft want to increase the price.

The one near certainty is that this Microsoft-Yahoo end game could get ugly–in a hurry. For all of Yahoo’s talk about being undervalued Microsoft could really go hostile and approach shareholders individually. If this deal ever got to a shareholder vote Yahoo could become a subsidiary of Microsoft. If you are are suffering Yahoo shareholder you are underwater–and Microsoft is throwing you a life vest.

I guess my interpretation was just about right. Also, it doesn’t look like Yahoo!’s rejection will be the final word on the matter. Microsoft still has the option to go directly to the shareholders or simply offer something higher. In any case, we’ll keep you posted on the developments.

Source: Press Release, ZDNet

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