Microsoft/Yahoo - is that all there is?
Microsoft says it has walked away from its bid for Yahoo, after upping its offer to $33, but Yahoo still asking for $37. Given the scale of the deal, and the potential for a clever play based (as I saw it) on email, I’m surprised. I thought Balmer would go hostile and pursue a proxy fight, which he hinted at. However, Balmer’s withdrawal letter to Yang (worth reading) makes it clear that Yang had more poison pills up his sleeve, and which which he was prepared to use. That, plus the absence of a compelling alternative for Yahoo, puts Yang & Co firmly in the sights of litigious shareholders who now face a major drop in value, most likely to below the pre-bid price of $20.
I’m not the only one surprised. Lance Wiggs shorted Microsoft on the expectation that the deal would go through (and weaken Microsoft as a result). But Lance implies (hopes) that Balmer’s walk-away might just be another negotiating tactic. In the letter to Yang is this hint: “I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares.”
Update: Rod Drury has written a witty paraphrase of Balmer’s letter to Yang.
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May 4th, 2008 at 6:14 pm
I suspect there were some very powerful forces stepping up beside Yahoo! during this escapade - Google brought its advertising to Yahoo!’s defence and TimeWarner are rumoured to have come to the table as well.
For Microsoft though I think this is an excellent move and well done to them for having the courage to walk away and not knacker two companies.
I, as a user of the Web, and grateful - two big powerful services (and yes, I believe Yahoo! are now focussed on the right services) to rival Google can only be a good thing.
November 7th, 2008 at 1:04 am
[…] Microsoft takeover offer at US$33 per share. Microsoft walked away from what seemed to many to be a badly overplayed hand by Yang. Yahoo then tried to do a deal with Google, replacing Yahoo’s search engine with […]