Yahoo's rejection on Monday of Microsoft's buyout offer sets the stage for the US software giant to up the ante or attempt a coup by ousting the Internet firm's board of directors.
Yahoo's board of directors spurned Microsoft's takeover bid, saying the US$44.6 billion offer was too low and not what was best for shareholders of the veteran Internet company.
Yahoo said it decided "after careful evaluation" that Microsoft's bid "substantially undervalues Yahoo." As a result, the board "concluded that the proposal is not in the best interests of Yahoo and our stockholders," it said.
Microsoft called the board's action "unfortunate" and urged Yahoo to reconsider its blockbuster bid to combine the two tech titans and said it offers "superior value" to Yahoo shareholders.
"As we have said previously, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo's shareholders are provided with the opportunity to realize the value inherent in our proposal," Microsoft said.
Microsoft, which called its bid "full and fair," could switch from wooing Yahoo's leaders to declaring war on them by making allies of shareholders in order to oust board members at annual elections in the middle of this year.
Yahoo's 10 board members are up for reelection. The deadline for board member candidate nominations is next month.
A small group of Yahoo shareholders last week filed a civil suit against the California company in a state court for not accepting a bid Microsoft made for the company early last year, when the stock price was higher.
"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 all parties," Microsoft said in its release.
"The Yahoo response does not change our belief in the strategic and financial merits of our proposal," it said.
Yahoo has rules in place that prevent Microsoft from being able to buy more than a 15 percent stake in the company directly from shareholders, so a board-circumventing "tender offer" is not feasible.
Reports indicate Yahoo wants at least US$40 per share and that Microsoft considers US$35 a top bid.
On Feb. 1, Microsoft unveiled what it called "a generous" offer to take over Yahoo, in an effort to merge the world's biggest software company with a major Internet player to take on search and advertising juggernaut Google.
Microsoft proposed US$31 per share, a 62 percent premium above Yahoo's closing price a day earlier.
Yahoo's share price climbed in the wake of the offer, and closed up over two percent at US$29.87 on Monday before Microsoft reiterated its offer.
Microsoft's stock price has slipped since the offer was made and dropped just over one percent to US$28.21 on Monday after news spread that the company might have to spend more to buy Yahoo.
Some analysts said the wording of the statement by Yahoo suggested the company was holding out for a better price and guarding against potential lawsuits from stockholders.
"Right now they are haggling," Silicon Valley analyst Rob Enderle said. "Yahoo is not saying no at any price. They are saying the Microsoft offer is not strong enough."
It is common for companies to rebuff initial buyout offers and hold out for sweeter deals.
Analysts at RBC Capital Markets said the rejection of the Microsoft bid signals that there is no sign of interest from competing bidders and that negotiations have entered a "counteroffer stage."
Reports surfaced on Monday that options being considered by Yahoo included merging with faded Internet star America Online, now owned by Time Warner.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft