Microsoft has put Yahoo on notice: Negotiate or we go into hostile-takeover mode.
The software giant set a three-week deadline for Yahoo brass to conclude a deal with Microsoft or face the threat of Microsoft taking more aggressive measures — including the launch of a proxy fight to replace Yahoo’s board of directors — to snare the company at a lower price than the $44 billion it offered Jan. 31.
“If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo board,” Microsoft CEO Steve Ballmer wrote.
“If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company from our perspective, which will be reflected in the terms of our proposal.”
Ballmer noted in the letter that Yahoo’s core search business appears to be slowing down in the two months since Microsoft made its offer, which at the time repped at 62% premium over Yahoo’s trading price.
Yahoo’s board formally rejected Microsoft’s bid in February, saying it undervalued the company. Judging by Friday’s closing share prices, Microsoft’s offer is worth just under $41 billion.
Yahoo had not issued a comment on the Microsoft letter as of Sunday.
Since Microsoft mounted its takeover bid for Yahoo, the pioneering Internet search firm has sought to pursue alliances with Google, News Corp.’s MySpace and AOL, but no alternative to Microsoft’s offer has surfaced.
Ballmer questioned why Yahoo was still dragging its heels and failing to engage Microsoft in a “meaningful negotiation” regarding a deal.
“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,” he wrote.
(The Associated Press contributed to this report.)