After a week of fevered speculation following a surprising and unsolicited takeover bid, Yahoo's board of directors today formally rejected Microsoft's $44.6 billion buy-out offer. From Bloomberg News:
After a 10-day review, the board decided the $31-per-share offer "substantially undervalues'' the company, Sunnyvale, California-based Yahoo said today in a statement. Yahoo didn't say what price it would accept.
Yahoo Chief Executive Officer Jerry Yang will seek to persuade shareholders he can win a higher bid or craft a plan to reignite growth in online advertising sales. The market may double by 2011, and Yahoo has lost out to Google Inc. and social- networking sites such as News Corp.'s MySpace and Facebook Inc.
"Yahoo thinks they're worth more because of the plans they've implemented that have yet to come to fruition,'' said Daniel Taylor, an analyst at research firm Yankee Group in Boston. "The board is saying, 'We think we can keep the company together and do far better with it than Microsoft ever will.'"
In its three-paragraph statement, Yahoo said it is worth more because of its recent work to bolster its ad technology, future prospects and investment portfolio. The decision was unanimous and the board is "continually evaluating" options to boost the stock's value, Yahoo said.
The rejection leaves Microsoft weighing whether to raise the price, give up or take the offer straight to shareholders. A person familiar with the matter said last week that Microsoft may seek to oust Yahoo directors should they reject its offer. ...
Google CEO Eric Schmidt contacted Yang to suggest a partnership, the New York Times reported Feb. 4. A partnership with Mountain View, California-based Google may allow Yahoo to outsource its search service, shedding the costs of running its own search engine and sharing ad revenue with its larger rival.
Google spokesman Matt Furman and Time Warner spokesman Ed Adler declined to comment.
While a Google partnership is an option, it would face stiff regulatory scrutiny, Moran said. News Corp. isn't interested in bidding for Yahoo, Murdoch said on a Feb. 4 conference call. That means Yang's options probably won't pan out, said Andrew Frank, a New York-based analyst at researcher Gartner Inc.
Jim Puzzanghera and Jessica Guynn, writing for the Los Angeles Times, believe that not only will Microsoft make a better offer, but that it must, in order to stay ahead of Google:
Although Yahoo doesn't want to sell to Microsoft, it has few alternatives. Many analysts expect Microsoft to sweeten its offer, and Yahoo to accept it.
If it wins Yahoo, the Redmond, Wash.-based software giant will have pulled off by far the largest acquisition in its 33-year history to try to keep Google from getting further ahead. ...
Google is lobbying against a potential Yahoo deal, saying Microsoft can't be trusted. Microsoft counters that it isn't the dominant player in Web advertising as it is in operating systems and office productivity software.
