Microsoft Proposes, Icahn Imposes, Yahoo Disposes
Techtree News Staff, Jul 14, 2008 1743 hrs IST
Yahoo turned down yet another bid from Microsoft, saying it was not in the interests of its stockholders.
Yahoo has yet again rejected a proposal from Microsoft, which teamed up with investor Carl Icahn for the latest bid. The offer was made on the evening of 11th July and Yahoo says that it was given less than 24 hours to accept the offer, whose fundamental terms were non-negotiable.
According to Yahoo, the offer included a "complex restructuring" of the company, including the acquisition of Yahoo's search business by Microsoft. Reports suggest that the offer included guaranteed $2.3 billion for five years as annual revenue from search advertising.
After reviewing the proposal with its legal and financial advisers, Yahoo's Board of Directors determined that accepting the proposal would not be in the best interests of its stockholders and declined the offer on Saturday.
Yahoo's decision of rejecting the offer was conveyed to the bidders on 12th of July. The company says that the Board's decision was based on a number of factors, including the following:
1. Yahoo's existing business, plus its recently signed commercial agreement with Google, has superior financial value and less complexity and risk than the Microsoft/Icahn proposal.
2. The Microsoft/Icahn proposal would preclude a potential sale of Yahoo for a full and fair price, including a control premium.
3. The major component of the overall value per share asserted by Microsoft/Icahn would be in Yahoo's remaining non-search businesses, which would be overseen by Mr. Icahn's slate of directors, with virtually no working knowledge of Yahoo's businesses.
4. The Microsoft/Icahn proposal would require the immediate replacement of the current Board and removal of the top management team at Yahoo. The Yahoo Board believes these moves would destabilize Yahoo for up to one year, which is how long it would take to gain regulatory approval for this deal.
In Yahoo's declaration rejecting the joint offer by Microsoft and Carl Icahn, Roy Bostock, chairman of Yahoo said, "This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo's stockholders in mind."
Further, Yahoo adds that Icahn, in a documented media piece, had earlier advised the company against selling its search business to Microsoft.
While admitting to the fact that this new offer included a number of improvements from the previous offers, Yahoo's Board maintained that Microsoft and Icahn were overstating the value their search and restructuring proposal would deliver to Yahoo stockholders and were substantially understating the risks.
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