Friday, March 07, 2008

Update On Yahoo Fending Off Microsoft

Since January, I've done a series of posts on Yahoo, starting with this one here in which I reported Yahoo looked ripe for a deal. Only a week later, Microsoft made an offer for Yahoo here.

On February 18, I explained some of the terms used in a hostile takeover here. My last post on the subject was two weeks ago here.

Yahoo's CEO Jerry Yang has made it clear he is not interested in the Microsoft offer. The danger he faces is that his shareholders are impatient with Yahoo's lackluster performance over the last couple of years. His argument that the company is worth more than $45 billion rings hollow--especially in today's economy. How likely is it that the company will rebound when their revenues are based on advertising, and when most pundits believe the U.S. is moving (or has moved) into a recession?

Microsoft has indicated it is prepared to take hostile action if necessary. One of its techniques might be to try and oust the Yahoo board of directors and replace them with people more favorable to the Microsoft offer. I've previously explained that the deadline for nominating a new slate of directors for Yahoo
was March 14th.

Yesterday, the Associated Press (AP) reported that Yahoo has postponed that deadline "hoping to gain more wiggle room as it tries to escape a takeover."

Yahoo has not announced the new deadline, which is based on
the date of its annual shareholder meeting. Once it announces the shareholder meeting date, Microsoft has ten days after that to nominate its own slate of directors.

This move gives Yahoo at best a couple of more months because the shareholders meeting has to be held by July 12.

Yahoo has been holding discussions with AOL (owned by Time Warner) and MySpace (owned by News Corp.), hoping to structure a deal that would allow Yahoo to remain independent.

The AP reports, "Most analysts still expect Microsoft to wind up buying Yahoo, possibly by raising its initial bid of $31 per share."

Stay tuned . . .

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