The three week Microhoo countdown begins...

The three week Microhoo countdown begins...

Summary: Microsoft took off the gloves and gave Yahoo three weeks to negotiate or the software giant will launch a proxy war. In a Saturday memo, Microsoft dropped the negotiating through the media routine and delivered its message loud and clear: Come with us if you want to live.


Microsoft took off the gloves and gave Yahoo three weeks to negotiate or the software giant will launch a proxy war. In a Saturday memo, Microsoft dropped the negotiating through the media routine and delivered its message loud and clear: Come with us if you want to live.

I suppose Steve Ballmer & Co.'s latest letter could be jarring on a Saturday afternoon (Techmeme), but Yahoo CEO Jerry Yang probably saw it coming. Yahoo has been trying to find white knights and Microsoft has been more than patient. It must be particularly galling to Ballmer that $31 a share can't get Yahoo to the table when it's increasingly clear the economy is headed to a recession.

Luckily for Yang, Ballmer won't walk away. Ballmer's letter indicates that Microsoft is still enamored with Yahoo. Ballmer could walk, but he won't. But at least everything is on the table now. Here's Microsoft's letter:

April 5, 2008 Board of Directors Yahoo! Inc. 701 First Avenue Sunnyvale, CA 94089

Dear Members of the Board:

It has now been more than two months since we made our proposal to acquire Yahoo! at a 62% premium to its closing price on January 31, 2008, the day prior to our announcement. Our goal in making such a generous offer was to create the basis for a speedy and ultimately friendly transaction. Despite this, the pace of the last two months has been anything but speedy.

Between the lines: You've had two months to find a white knight and we're the only game in town.

While there has been some limited interaction between management of our two companies, there has been no meaningful negotiation to conclude an agreement. We understand that you have been meeting to consider and assess your alternatives, including alternative transactions with others in the industry, but we’ve seen no indication that you have authorized Yahoo! management to negotiate with Microsoft. This is despite the fact that our proposal is the only alternative put forward that offers your shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers.

Between the lines: Thinly veiled proxy war threat here--get used to it there are a bunch of them.

During these two months of inactivity, the Internet has continued to march on, while the public equity markets and overall economic conditions have weakened considerably, both in general and for other Internet-focused companies in particular. At the same time, public indicators suggest that Yahoo!’s search and page view shares have declined. Finally, you have adopted new plans at the company that have made any change of control more costly.

Between the lines: We could cut this $31 price. Don't tempt us. What will your shareholders do if we walk and your stock price goes to $15 in a day?

By any fair measure, the large premium we offered in January is even more significant today. We believe that the majority of your shareholders share this assessment, even after reviewing your public disclosures relating to your future prospects.

Between the lines: Did we mention we're not kidding about this proxy war?

Given these developments, we believe now is the time for our respective companies to authorize teams to sit down and negotiate a definitive agreement on a combination of our companies that will deliver superior value to our respective shareholders, creating a more efficient and competitive company that will provide greater value and service to our customers. 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. The substantial premium reflected in our initial proposal anticipated a friendly transaction with you. 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.

Between the lines: Yup, we're serious about that proxy war. But we still love you so we'll give you three weeks.

It is unfortunate that by choosing not to enter into substantive negotiations with us, you have failed to give due consideration to a transaction that has tremendous benefits for Yahoo!’s shareholders and employees. We think it is critically important not to let this window of opportunity pass.

Between the lines: You're doomed without us. And we're less doomed without you. C'mon folks let's get together.

Sincerely, Love,

Steven A. Ballmer Chief Executive Office Microsoft Corp.

Topics: Social Enterprise, Banking, Microsoft

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  • Now give FOSS three weeks or else !!!!!!!

    Muhahahahahahahahaha !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    Tick tock tick tock .....

    See ya ;-)
  • Funny to watch Balmer squirm here. Ballmer is in a hurry because he know

    that Yahoo is not doing that bad, and the stock could go up. He is also desperate to start the next phase of stopping Google before they get any stronger.

    Yahoo just needs to be patient. The best thing for shareholders would be to remain independent.
    • Buwahahahahaha

      Dude, you are totaly off the deep end.
      • If MS is committed, the Yahoo investers just need to be patient.

        The price WILL rise.
        • Guess you haven't been

          watching the stock or what the big stockholders are saying...
          • Or watching know nothing No_Ax trying to talk his shares up ...

            Why is it you like Microsoft again? LOL
  • Microshaftyoo.O

  • RE: The three week Microhoo countdown begins...

    Ah well, just watch Yahoo's stock to go up, and Microsoft's down in reaction to this. My guess is that going aggressive here is going to make it all cost Microsoft much more than it wants to.

    Also, it'll be fun to see if Yahoo spins off a bunch of its divisions before this all hits the fan.
    • I guess you

      are clueless about how a proxy fight/takeover works.
  • Wonder what patent Yahoo that make MS is so desperate

    Yahoo must own a patent to something that MS stole and they know that as soon as Yahoo finds out, they probably have to remove one of their flagship product of the market.

    Also, why not up the offer and get it over. This smells funny ... I wonder if that $40B bank account is real of just a lie to keep the investors artificially happy.
  • RE: The three week Microhoo countdown begins...

    Hah. Microsoft is threatening Yahoo.
  • RE: The three week Microhoo countdown begins...

    It would be a good debate if someone, anyone made a sensible comment.

    Several of you make it out as though Yahoo! are in the box seat. If they don't take what Microsoft are offering and Microsoft pull the deal, the company will be utterly crushed by class-action suits from disgruntled shareholders.

    Your share is only worth something when someone wants to buy it at a price higher than you acquired it at. Right now, Microsoft has set their price and the market has demonstrated that it believes Microsoft's offer has plenty of premium in it to win the day.

    Yahoo! is a questionable business for Microsoft to acquire. Their new "strategy" has only gone public because showing it off in private to other potential investors hasn't drawn a bit, so they are hoping that someone (anyone) gives them a positive push and people buy stock from it. Frankly, there is nothing in Yang's background to suggest that he can pull off the numbers he's promoting.

    Yahoo! is done like dinner, stick a form in them. You can like or dislike Microsoft, but as a shareholder of Yahoo!, I'd be very grateful for their generous offer.
    • Exactlly, its not about religion, its about money.

      And money is what the OWNERS (stockholders) want. Its why they made the investment.
      • its not about religion

        The love of money is the root of evil, so.... it IS about Religion..... Microsoft looooooves your money..... religiously.

        You didn't think they care about your handsome physique or the divine wisdom that oozes from your smiley face, did you? Nope! They don't give two whoops in hell about you. They just want your money.
        Ole Man
        • We all know he's trying to talk his own MSFT shares up

          That's why he keeps banging on with his retarded posts - he actually doesn't know/give a damn about technology and its' real potential - it's all about him and the short term filthy money ..... who needs progress when the pigs can get their snouts in the trough instead?
  • Shareholders will be rewarded by avoiding a quick $

    Shareholders need to sit tight and enjoy the benefits that
    come from a real investment in a good/solid company with
    a sound business plan for future growth.

    The company they invested in, not MS. There is no
    integration plan presented by MS, and much talk about the
    difficulty of integration. What MS is buying is traffic and
    connections to ATT. The technology Yahoo is using is
    already available to everyone. Therefore, one can conclude
    they will force their platform on all of Yahoo's users
    causing disruption and discontent. MS once again, does a
    great dis-service to innovation and choice.
    • You can't find a single shareholder that agrees

      with your silly statement. If Yang and the board don't move quickly they will be facing stockholder law suits.
  • SIlly posts...

    I am surprised so many have no clue about this and try to boil it down to some fanatical position and silly posts. No wonder these posters never make it and will always be wage slaves.
    • RE: SIlly posts... ?

      "... <a href="">wage slaves.?</a>"
    • minor detail: No_Ax_to_Grind is also a poster.

      You may want to think about these things before you post. Not that I care either way if Microsoft buys Yahoo or reduces shareholder value (for either company).