Microsoft Sets April 26th Date for Hostile Takeover of Yahoo Inc.

April 5, 2008

(Long Island, N.Y.) On Saturday Microsoft executives warned board members at Yahoo Inc. that if it did not accept its $41 billion buyout offer by April 26th, a three-week deadline, that it would launch a hostile takeover at a much less attractive price.

According to a press release, the warning was made by Microsoft’s chief executive, Steven A. Ballmer, in a letter sent by e-mail. It expressed dismay at Yahoo’s refusal to enter into formal negotiations over Microsoft’s January 31st takeover bid and warned that without an agreement by the deadline, Microsoft would move swiftly to oust Yahoo’s board.

“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,” wrote Microsoft Chief Executive Steve Ballmer.

“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,” he wrote.

Yahoo’s board formally rejected Microsoft Corp.’s bid in February, saying it undervalues the company.

Since the offer was first made, public equity markets and overall economic conditions have weakened, while Yahoo’s search and page view shares have declined by some estimates, Ballmer said.

“By any fair measure, the large premium we offered in January is even more significant today,” adding that he believes the majority of Yahoo shareholders would agree.

Microsoft has said from the start that it would consider all possible ways of getting the deal done, including taking its offer directly to Yahoo’s shareholders, as well as working to elect its own candidates to fill Yahoo’s board at the company’s annual annual shareholder meeting, and thus the deadline for Microsoft to nominate its slate.

Yahoo has not set a new date for the meeting. Before Saturday, it was known that Microsoft had hired a proxy solicitation firm to help with a hostile bid, but the software maker had made no pronouncements as to when that might happen.

If it’s ultimately completed, a Yahoo deal would be the biggest acquisition in Microsoft’s history. Despite its legendary cash reserves, more than $21 billion as of the end of last year, Microsoft would need to borrow money to complete the transaction.

Microsoft executives have called the Yahoo acquisition bid key to their efforts to catch Google in the Internet search and advertising markets.

The online advertising market is expected to increase from over $40 billion in 2007 to nearly $80 billion by 2010.

Microsoft letter to the Yahoo! Inc. Board of Directors
http://money.cnn.com/news/newsfeeds/articles/prnewswire/CLSA50005042008-1.htm

Posted by News LI Editor · Edited by Brianna - Filed Under Technology