FT.com / In depth - Microsoft warns Yahoo on $42bn offer
Microsoft warns Yahoo on $42bn offer
By Chris Nuttall and Richard Waters in San Francisco
Published: February 11 2008 14:28 | Last updated: February 11 2008 23:44
Microsoft described Yahoo’s rejection on Monday of its unsolicited offer as “unfortunate”.
The software company warned that it was prepared to bypass the internet company’s board to complete a transaction currently valued at $41.8bn. Microsoft was responding to a Yahoo statement that the software group’s February 1 proposal “substantially undervalues” the internet company.
Analysts had speculated that the Yahoo board was holding out for a higher offer than the $31 per share originally proposed. But, sensing that Yahoo was in a weak position, Microsoft said its offer was “full and fair” and gave no indication that it would raise the price.
Microsoft shares had slipped 1.2 per cent to close at $28.21 as Wall Street anticipated a higher offer. They gained 0.25 per cent in after-hours trade following the group’s firm line. Microsoft’s statement said: “Based on conversations with stakeholders of both companies, we are confident that moving forward promptly to consummate a transaction is in the best interests of both parties.”
The software group has been sounding out Yahoo’s largest shareholders, principally Capital Research & Management, which holds an 11 per cent stake and is also an investor in Microsoft. The company’s next step could be to make an exchange offer for Yahoo shares to stockholders, turning its approach hostile. It could also launch a proxy contest to try to unseat the board. “Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo’s shareholders are provided with the opportunity to realise the value inherent in our proposal,” its statement warned.
Analysts feel Yahoo investors would settle for a higher offer from Microsoft.
Copyright The Financial Times Limited 2008
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