Yahoo! Rejects Microsoft Bid, Asks for More?

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The WSJ just sent out a report saying that Yahoo!’s board has potentially decided to reject the bid from Microsoft. The general feeling in the board meeting, WSJ reports, was that the $31-per-share price “massively undervalued” Yahoo!’s stock, another perception being that Microsoft is trying to take advantage of Yahoo!’s current situation. So, what came out of it? This: “The company is unlikely to consider any offer below $40 per share, the person said.

Over the last couple of weeks, there has been a lot of talk by the press and the media — more than perhaps within Yahoo! itself — a possible Google co-search-advertising-acquisition, other players like Newscorp and AOL being possible contenders, not to mention a lot of outrageous pairing-up. That said, I’m pretty sure Jerry Yang and board have been vigorously sketching out all the alternatives and are already in talks with every likely contender.

One thing is for sure by this move, though. Yahoo! isn’t desperate — they’ll either go through to the tough times and evolve slowly by learning, or agree to a price that values them well. But of course, the question comes down to Microsoft: would they be willing to go higher? A $40 bid would increase Yahoo!’s total valuation by $12 billion — a 25% of their current bid — which I’m not sure Steve Ballmer is the kind of a guy who’d give-in so easily on.

Obviously, the board is putting in a lot of effort to prevent a hostile take-over. The last thing they’d want would be to, while going through a reinvigorating phase, is be taken over by some technology giant and have things distrupt. The WSJ also reports, in this matter, that they’ve taken “poison pill” provisions to prevent an unwanted takeover and that Microsoft “would likely have to oust the board in order to overturn them.”

So it’s clear from all this that Steve isn’t going to get his way for under $40 a share. Try again, Microsoft.


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