Yahoo: Microsoft bid undervalues company
SAN FRANCISCO -- Yahoo yhoo, facing a late April deadline from Microsoft msft to accept its $41 billion buyout offer, on Monday said it does not oppose a deal with the world's largest software maker but wants a sweetened bid.
The statement came shortly after Microsoft warned Saturday that if a deal isn't reached by April 26, it will launch a hostile takeover at a lower price.
"We are not opposed to a transaction with Microsoft if it is in the best interests of our stockholders," CEO Jerry Yang and Chairman Roy Bostock wrote in a letter to Microsoft CEO Steve Ballmer. "Our position is simply that any transaction must be at a value that fully reflects the value of Yahoo, including any strategic benefits to Microsoft, and on terms that provide certainty to our stockholders."
In midday trading Monday, Yahoo shares dipped 2% to $27.73. Microsoft's stock was unchanged at $29.07.
Microsoft's $31-a-share bid for Yahoo, made public Feb. 1, would create a stronger rival to Google, which dominates the online search advertising market. At the time, the bid was valued at $44.6 billion, or 62% above Yahoo's market value.
Yahoo's board formally rejected Microsoft's bid on Feb. 11, saying it undervalues the company. And in Monday's letter, Yang and Bostock said Microsoft's threat to go hostile is "counterproductive and inconsistent with your stated objective of a friendly transaction."
Yang and Bostock criticized Microsoft for implying that the two companies hadn't discussed the deal since February. The Yahoo leaders said the two companies "have had constructive conversations together regarding a variety of topics, including integration and regulatory issues.
"Moreover, Steve, you personally attended two of these meetings and could have advanced discussions in any way you saw fit," they wrote.
Microsoft had no immediate response to the Yahoo statement beyond the "explicit" letter Ballmer sent to Yahoo's board on Saturday, according to Joele Frank, a spokeswoman hired by Microsoft to advise on the Yahoo deal.
Ballmer questioned why, lacking another offer, Yahoo is still dragging its feet. "This is despite the fact that our proposal is the only alternative put forward that offers your shareholders full and fair value for their shares," Ballmer wrote in his letter to Yahoo on Saturday. Ballmer said the Microsoft offer has grown stronger as the economic climate has weakened and that Yahoo's shareholders agreed.
Yang and Bostock rebutted Ballmer's claim that most Yahoo shareholders support a deal, writing, "Stockholders representing a significant portion of our outstanding shares have indicated to us that your proposal substantially undervalues Yahoo."
The company recently released a financial forecast that calls for its revenue to soar more than 70% over the next three years.
But Yahoo faces a daunting deadline with Microsoft's latest threat, analysts say.
"The tiger is stalking the wildebeest," says Roger Kay, president of market researcher Endpoint Technologies Associates. "With the deadline, the bomb now has a fuse on it if Yahoo can't assemble a white knight.
"Either it's News Corp., AOL, Google or an unknown consortium — or it's into Microsoft's sweaty arms," Kay says.
Contributing: The Associated Press