No means no.
That was Yahoo’s message to Microsoft on Monday, as the Web portal reiterated its rejection of the tech giant’s acquisition bid. Microsoft threatened over the weekend to take its offer directly to shareholders and try to elect a new board of directors via a proxy fight.
Shareholders didn’t seem optimistic that Yahoo will be able to attract a higher bid or exceed the value of Microsoft’s offer on its own, as the Netco’s stock fell 2% on Monday.
Yahoo CEO Jerry Yang and chairman Roy Bostock said in a letter to Microsoft CEO Steve Ballmer that they are not necessarily opposed to a deal but think that the offer is too low, particularly since the offer’s value has fallen some 5% since it was made due to a decline in Microsoft’s stock price.
The half-cash, half-stock offer was originally $44.6 billion but now stands at just over $42 billion.
Ballmer’s Saturday letter gave the Netco a three-week deadline to conclude a deal and criticized Yahoo’s top brass for failing to engage in a “meaningful negotiation” since Microsoft announced its buyout offer for Yahoo on Jan. 31.
“If we have not concluded an agreement within the next three weeks,” Ballmer wrote, “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. The substantial premium reflected in our initial proposal anticipated a friendly transaction with you. 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.”
Yang and Bostock countered that Microsoft is essentially ignoring Yahoo’s mid-February assertion that the offer undervalued their company’s value, growth potential and the synergies it would bring to Microsoft. They also chided Ballmer for the harsh tone of Microsoft’s threat to launch a proxy fight to replace Yahoo’s independent board members and conclude a deal at a lower price.
“We have had constructive conversations together regarding a variety of topics, including integration and regulatory issues,” they said. “Your comments that we have refused to enter into negotiations to conclude an agreement are particularly curious given we have already rejected your initial proposal, nominally $31 per share at the time, for substantially undervaluing Yahoo and your suggestions in your letter and the media that you are considering lowering the value of your proposal,” Yang and Bostock wrote. “We have continued to make clear that we are not opposed to a transaction with Microsoft if it is in the best interests of our stockholders. 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.”
Yahoo also unveiled a new advertising platform called AMP that it will launch this summer in an effort to create one marketplace for selling online ads across a variety of outlets, starting with Yahoo’s sites and those of 600 partner newspapers.
Microsoft had no additional comment Monday and gave no indication whether it will increase its bid. Many observers have said the offer would have to go up to around $35 per share to become unrejectable for Yahoo’s board. Initially $31 per share, Microsoft’s offer now stands at about $29 per share. Yahoo stock closed at $27.70 Monday.