updated 08:15 am EDT, Mon April 7, 2008
Yahoo Rejects MS Ultimatum
Yahoo on Monday morning published a letter rebuffing Microsoft's imposed three-week deadline to accept a takeover bid, dismissing many of the claims made in the original argument. The formal rejection again states that Microsoft's $31 per share bid "substantially undervalues" Yahoo and adds that the actual value of the deal has decreased since it was suggested in late January, with Microsoft's share value having dropped while Yahoo's has increased.
Company chief Jerry Yang and chairman Roy Bostock add that Yahoo is performing in line with expectations and has no immediate need to partner with the Windows developer. A new ad system launching today should help, the executives say. They also hint that they are "exploring [their] strategic alternatives" to find what they see as the best value for the company.
Yahoo's board of directors is not averse to a deal but would require a higher offer, according to the letter.
The authors also accuse Microsoft CEO Steve Ballmer of presenting a misleading picture of actual events. In addition to refuting claims that a poor US economy is damaging Yahoo's business, Yahoo points out that Microsoft's threats of lowering its offer and beginning a proxy battle to replace the company's board with Microsoft-friendly members both contrast sharply with claims of a "friendly" offer and that negotiations have been far more active than suggested. Ballmer has had the chance to improve negotiations but has never taken advantage of the opportunity, Yahoo claims.
"Steve, you personally attended two of these meetings and could have advanced discussions in any way you saw fit," the letter notes.
Yahoo has also returned with accusations of its own and notes that Microsoft has yet to respond with details of potential regulatory issues with a takeover, including antitrust investigations that would need to be passed before any approved union. Although not explicitly mentioned in the letter, Microsoft's ownership of Yahoo would create legal difficulties for China-based Alibaba, which is concerned that Microsoft may impose more control on its business and go against Chinese guidelines.
Microsoft itself has argued that a takeover of Yahoo is necessary to prevent Google from establishing monopolies in search and web advertising.