USD44.6 Billion Is Too Cheap For Yahoo
Yahoo Board to Reject Takeover Bid From Microsoft
By ANDREW ROSS SORKIN and MIGUEL HELFT
SAN FRANCISCO — Yahoo’s board of directors plans to reject Microsoft’s $44.6 billion hostile bid with a letter Monday saying the offer undervalues Yahoo, a person familiar with the matter said Saturday.
The decision to reject the bid was taken following a board meeting Friday in which directors explored ways in which to respond to Microsoft’s week-old bid. The board heard presentations from Yahoo’s management and its bankers, according to people familiar with the discussions. Several people argued that the company was worth more than what Microsoft offered, this person said.
The board was also presented with various options for maintaining Yahoo’s independence, including an advertising partnership with Google that could improve Yahoo’s bottom line, this person said.
Lawyers at the meeting discussed the antitrust implications of a tie-up with Google, as it would extend that company’s dominance of the search advertising market, the person said. They also discussed how to press Microsoft to increase its bid.
Yahoo declined to comment on Saturday. Yahoo said earlier in the week that its board was evaluating Microsoft’s offer and other alternatives.
Yahoo could give an immediate lift to its revenue and profit by outsourcing its search-related ad business to Google, because Google’s advertising technology generates far more cash for every search query, on average. This option had long been recommended by some Yahoo investors and analysts, but Yahoo executives had said that search ads were an integral part of the company’s business.
In recent years, Yahoo has invested millions in a new search advertising system, called Panama, in an effort to close the gap with Google.
The technology, which Yahoo began to roll out early last year, has helped increase search advertising revenue, but Google’s technology remains more efficient, according to analysts. For Yahoo executives, replacing Panama, or other parts of its search system, with Google’s technology would be an admission of defeat.
Nevertheless, the board has considered the idea, after a call last week by Google’s chief executive, Eric E. Schmidt, to his Yahoo counterpart, Jerry Yang, offering his company’s help in fending off the Microsoft bid.
Source: New York Times