Microsoft Gives Yahoo 3 Week Ultimatum
by , 6:15 PM EDT, April 5th, 2008
Microsoft CEO Steve Ballmer presented the Yahoo Board of Directors a letter on Saturday that in no uncertain terms gives the Internet search company three weeks to agree to a buyout or face a more hostile take over attempt. The ultimatum states that Microsoft is ready side step Yahoo's Board and present an offer directly to the company's shareholders.
"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," Mr. Ballmer's letter said. "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."
Mr. Ballmer added that even though Microsoft considers Yahoo to be worth far less than it was when the original buyout offer was presented at the beginning of February, his company is not lowering its offer. He did, however, make it clear that if Microsoft goes directly to Yahoo's shareholders, the offer will be changed to more closely reflect the company's current value.
"During these two months of inactivity, the Internet has continued to march on, while the public equity markets and overall economic conditions have weakened considerably," he said. "By any fair measure, the large premium we offered in January is even more significant today. We believe that the majority of your shareholders share this assessment, even after reviewing your public disclosures relating to your future prospects."
Microsoft presented Yahoo with an unsolicited buyout offer of US$44.6 billion on February 1 following the company's reported 23 percent drop in earnings. Yahoo rejected Microsoft's offer, and then began talking with Time Warner about a possible AOL deal to block Microsoft from attempting a hostile takeover.
Mr. Ballmer drove his point home on Saturday by stating "It is unfortunate that by choosing not to enter into substantive negotiations with us, you have failed to give due consideration to a transaction that has tremendous benefits for Yahoo's shareholders and employees. We think it is critically important not to let this window of opportunity pass."