Software giant Microsoft is understood to have issued Yahoo! with a three-week deadline to close its major €44.6bn merger bid on the company.
Since Microsoft launched its mega-merger that has the potential to allow it to turn the tables on Google, its offer has been spurned by Yahoo!, which claimed the offer – at US$31 a share – undervalues the company.
However, Microsoft has shown no signs of becoming disheartened. All indications are that the manoeuvres will shift in the direction of a proxy battle which would go before a shareholder vote. If successful, it could see Yahoo!’s current board ousted.
On Friday, Microsoft CEO Steve Ballmer, said the company’s bid to buy Yahoo! at a 62pc premium was a generous offer but that he was exasperated at the lack of progress over the past two months since Microsoft made its offer.
“While there has been some limited interaction between management of our two companies, there has been no meaningful negotiation to conclude an agreement. We understand that you [Yahoo!] have been meeting to consider and assess your alternatives, including alternative transactions with others in the industry, but we’ve seen no indication that you have authorised Yahoo! management to negotiate with Microsoft.
“This is despite the fact that our proposal is the only alternative put forward which offers your shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company and enhances choice for content creators, advertisers, and consumers.
“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, both in general and for other internet-focused companies in particular.
“At the same time, public indicators suggest Yahoo!’s search and page view shares have declined. Finally, you have adopted new plans at the company which have made any change of control more costly,” Ballmer thundered.
He added that the premium proposed by Microsoft is even more significant now than when first offered.
He said the time was right to authorise teams to sit down and negotiate an agreement.
“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.
“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.”
By John Kennedy