Sources: Financial Times, Bloomberg
Yahoo! is set to officially turn down Microsoft Corp.’s $31 billion bid. As noted in an earlier blog, Microsoft offered $31 for each share of Yahoo! stock. This was far greater than the approximately $19 per share Yahoo was trading for at the time of the Microsoft offer. Yahoo, a distant second in the web search industry, was faced with a $44.6 billion unsolicited takeover bid last week. The Yahoo! board, upon reviewing Microsoft’s offer, has apparently decided the $31 per share was too low, and has voted to reject it. It has been speculated that Yahoo! directors were seeking at least $40 per share. Nevertheless, many experts believe this deal is not dead, but rather the $31 per share offer would be simply an initial volley to begin a round of negotiations. A deal could be reached if the offer price increased to $34-$37 per share. Microsoft offered $43 per share a year ago, when Yahoo! was trading at a much higher level.
Despite Yahoo! apparent rejection of Microsoft’s offer, Microsoft may seek to engage in other means to succeed in the takeover. Microsoft’s CEO, in the offer presented to Yahoo!, noted that Microsoft “reserves the right to pursue all necessary steps.” It is believed that Microsoft could initiate a “proxy contest” and takeover the Yahoo! board. It has hired a series of experts at various proxy solicitations firms and financial advisors. Yahoo! is also preparing for a proxy fight. Yahoo has hired its own experts, and is rumored to be seeking assistance from other companies, such as News Corp. or even Google. The New York Times has reported that Google CEO has made initial forays into a discussion about a Yahoo-Google partnership. Rupert Murdoch, the owner of News Corp., has been stated as not being interested in such a partnership.
Question: If Yahoo! successfully staves off the Microsoft bid by entering a partnership with Google—how could such a deal survive regulatory scrutiny?
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