Microsoft readies assault on Yahoo board
Like a lion chasing a weakened gazelle, Microsoft knows it will capture Yahoo eventually. The challenge now is to do it as quickly and painlessly as possible.
To that end, Microsoft (MSFT) is moving in for the kill. The software giant is poised to take its takeover bid of more than $40 billion directly to Yahoo (YHOO) shareholders, overthrowing a Yahoo board of directors that dismissed the offer as too low. Microsoft executives hope that by forcing a shareholder vote, they can get speedier regulatory approval and avoid having to fork over billions more for Yahoo.
Microsoft would not officially comment about its next moves. But the company has retained proxy firm Innisfree to round up shareholder support, and a source familiar with the company’s plans said Microsoft is indeed preparing to replace Yahoo’s board and smooth the way for a takeover.
The bid for Yahoo comes because Microsoft believes that together the two companies can mount a challenge to Google (GOOG) in online advertising. Today Google is by far the top company in search advertising, and with its pending purchase of DoubleClick, it stands to dominate display advertising as well. Microsoft insiders say the Yahoo purchase is the company’s best chance to slow Google’s momentum and rally enough engineers to out-innovate the search juggernaut.
But will Microsoft still have to raise its bid to get Yahoo? The company is doing its best to avoid it. Microsoft Chairman Bill Gates pointed out that Yahoo hasn’t gotten any better deals, telling the Associates Press this week: “We think that’s a fair offer. They should take a hard look at it.”
Indeed, Microsoft has a lot to lose by raising its bid too far. Even offering an extra $1 per share would cost about $1.4 billion, whereas waging a proxy fight would cost only about $30 million, one insider said. And since some large Microsoft shareholders already feel that the company is overpaying for Yahoo, it’s no surprise that executives aren’t waving more dollar bills around.
There’s still a good chance that Microsoft will end up paying a little bit more before the Yahoo deal closes, but there’s an art to these negotiations. If Microsoft offers to raise its offer too soon, it risks getting into a bidding war with itself — Yahoo shareholders might hold out in hopes of squeezing out a few more billion dollars. But if it waits until the deal seems sure to close and then sweetens the bid, Microsoft could end up looking like a benevolent conqueror.
It could be good for Microsoft to raise its bid at least a little, and leave Yahoo shareholders and employees with something extra to feel happy about. And it’s worth noting that for all the bluster, Microsoft hasn’t ruled out paying a little more to seal the deal.
As never a fan of MSFT, I admit, they are doing this right; proxy,new board, offer a few dollars ($2) and overturn the greedy ’screw the shareholders and reward the brain-dead employee bonus plan.’ All of YOU out there, QUESTION: don’t you all think this search=advertising=big$$$ is a bunch of over-inflated B.S.?? If you have a great portal, you aren’t going hungry, AND, something the Madison Avenue fools don’t want their ad-addicted junkie clients to know…LESS is more…do you NEED, WANT more stupid adverts?
It’s understandable that Microsoft wants to buy Yahoo, but what advantage is it for Yahoo, a profitable company, to be bought by Microsoft? Yahoo has obvious problems and Yang and Decker are moving too slow, but will they be solved by a painful takeover? No. If the larger shareholders want to sell, why not sell now while the price is up? I did and when if it goes down I’ll buy in.
Wow! Lots of hostility in here. No one complains that Google has a huge lead in online advertising (display and search). No one is even close in those arenas. “Don’t be evil” huh? Yeah, whatever! Then why do you allow people’s right to free speech and expression to be censored by the Chinese government? Because you want Chinese money. The excuse of “if not us … then it will be someone else”, is the same arguement that drug dealers make on a witness stand. Pathetic …
I’m no MS fan but I’m tired of google ads, almost every site I go I see google ads, they really have made web sites less enjoyable and my eyes are well trained to skip those ads (but still annoyed). I want to see more competition and hopefully better way to advertise.
Microsoft will get Yahoo whether Yahoo like it or not. I just hope they will let Yahoo retain their name or apart of it.
Hey where’s the letter from Mr.Yang to Yahoo stockholders? I read the comment 30 minutes ago. did they delete it?
Interesting name. Yahoo by Microsoft. Seems like YAHMIC! will really happen.
MS can as well go after other genuine Online Search companies at a much lesser Cost.
No doubt Yahoo might have a Public clout but it just does not make sense to take over Google you want to buy Yahoo with such a huge amount.
Event if you you give half the amount i.e around 20(Twenty)Billion there are quite a bit of good online companies which can keep the MS Windows/Existing products go to Online successfully.
Latest letter from Mr. Yang to Yahoo Stockholders.
Dear Stockholders,
We have no choice but to accept Microsoft’s offer. I don’t want our company to be involved in a proxy war which will just end up Microsoft winning it by a mile. I have suggested to name the company Yahoo by Microsoft so as not to lose our identity and brand. Either way, if they insist on putting their name together with Yahoo then I am not considering Microhoo for it because it sounds like a kitchen appliance — Microhood. I like the idea of naming it Yahoo by Microsoft or YahMic! This way, our brand Yahoo will always come first.
This will be a great company and we are moving quickly to make it come true.
Billy Yang,
YahMic! Inc.
It’s about time they woke up and decided to put a boot up Google tail.
Not surprising the Microsoft monster wanting to take over something else. They are like a beast that consume everthing it can to survive. Maybe they should invent something original for themselves instead of stealing and taking everyone else’s ideas and creations.
Yet another shining example of how Microsoft can run over anyone they want to.
Microsoft – benevolent…Ha!
Everyone that is in favor of this acquisition seems to dismiss that Microsoft’s competing portal to Yahoo! (MSN) loses money qtr after qtr; year after year. If MSN can’t get it right with their own portal, why does everyone think they can get it right with the acquisition of Yahoo!? I would hazard a guess that the combionation of MSN and Yahoo! would follow in the same path and mis-management of Microsoft’s MSN – a portal that loses money … qtr after qtr; year after year.
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A senior writer for Fortune, Jon Fortt focuses on technology and innovation in Silicon Valley - a subject he's been reporting on since his days as a rookie reporter for the Lexington (Ky.) Herald-Leader. Before joining Fortune in 2007, Jon had reporting and editing stints at Business 2.0 magazine, and the San Jose (Calif.) Mercury News, Silicon Valley's hometown newspaper.
This is the best move by MSFT ever – to acquire one of the most well known global brand name in the industry. As one reader pointed out, I too am tired of seeing Google ads where ever I surf. Google is too dominant and MSFT and Yahoo as separate entities will never be able to catch up. This is one of the best opportunity they will ever have to try and close that gap. Google once fought MSFT from acquiring DoubleClick arguing they would monopolize the internet advertisement industry. How ironic today that Google is the one playing monopoly.