Microsoft: See the Yahoo, Take the Yahoo

The messaging out of Redmond about its desires for Yahoo is clear: Microsoft will acquire the company whether CEO Jerry Yang and his merry band of board like it or not.To wit:Dealbook reports that Microsoft will authorize a proxy fight to take Yahoo.

The messaging out of Redmond about its desires for Yahoo is clear: Microsoft will acquire the company whether CEO Jerry Yang and his merry band of board like it or not.

To wit:

Conclusion: Microsoft is leaking word of its plans for a proxy fight to either force Yahoo's board into a decision, come up with a real deal to counter Redmond's or come along quietly. And if Yahoo doesn't Microsoft will win in a proxy fight because it has two things: Cash and shares that look more attractive even if all they do is pay a dividend.

So what are the moving parts to ponder?

Yahoo shareholders: If given the choice to vote their shares for a Microsoft deal it's highly likely that they will go for it. There's a lot of overlap between the two shareholder bases and they are likely to want the deal to get resolved. Simply put, there's a just right price that will satisfy the overlapping shareholders. Perhaps $31 a share is just right.

Brain drain: Talent is already leaving Yahoo so concerns about bringing teams together and all of that touchy feely stuff is off the table. Sure Microsoft would like to keep most of Yahoo's talent, but if folks are leaving anyway let em. Take the Yahoo brands.

Integration: The thought of Microsoft integrating Yahoo obviously doesn't scare Redmond. Perhaps Ballmer and Co. feel like they have no choice. Or Ballmer thinks he actually has a good plan.

Yahoo's board: This move by Microsoft is going to split the board--especially if options like News Corp. fall to the wayside. How much bargaining power does Yahoo really have?

We're about to find out. There's nothing like a good old fashioned proxy fight.

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