Yahoo unfazed by Microsoft’s hostile takeover threat, wants better offer

Two days after Steve Ballmer gives three-week deadline, Jerry Yang writes to say the under-$41 bn-offer is ‘not in the best interest of shareholders’

Internet icon Yahoo, under pressure from Microsoft to accept its $41-billion buyout offer, said on Monday that it does not oppose a deal with the huge software maker but wants a better offer. The statement comes after Microsoft warned on Saturday that if a deal isn’t reached by April 26 the software company would launch a hostile takeover at a less attractive price.

Microsoft made its offer for Yahoo in late January. The deal would create a stronger rival to Google Inc. At the time, the cash-and-stock offer was valued at $44.6 billion, or 62 per cent above Yahoo’s market value. As of Friday, the deal was worth just under $41 billion. Yahoo’s board formally rejected Microsoft Corporation’s bid in February, saying it undervalues the company. Jerry Yang, chief executive of Sunnyvale, California-based Yahoo Inc, and Chairman Roy Bostock sent a letter on Monday to Microsoft CEO Steve Ballmer, reiterating that the current offer is “not in the best interests of shareholders” of Yahoo.

“We are open to all alternatives that maximise stockholder value,” Yang and Bostock said in the letter. “To be clear, this includes a transaction with Microsoft if it represents a price that fully recognises the value of Yahoo on a standalone basis and to Microsoft, is superior to our other alternatives, and provides certainty of value and certainty of closing.”

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In the letter, Yang and Bostock assert that Microsoft has mischaracterised the companies’ discussions, and say the company’s threat to begin a hostile takeover is “counterproductive.” Over the weekend, Balmer disclosed he had given Yahoo a three-week deadline to accept the offer. “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,” Ballmer wrote.

“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,” he wrote.