It's hard to tell whether FT has a scoop or is just speculating, but it doesn't take a rocket scientist to predict that Microsoft's next step is a hostile bid:
Microsoft is gearing up to take its bid to acquire Yahoo directly to the Silicon Valley company's shareholders after the expected rejection by the Yahoo board of the software giant’s $31-per-share offer....
Microsoft has a team of advisers in place for any proxy fight. It includes Alan Miller of Innisfree, the proxy solicitation firm, and Joele Frank, the New York M&A public relations specialist, as well as financial advisers from the Blackstone Group and Morgan Stanley. Yahoo is using Dan Burch at MacKenzie Partners, a proxy firm that would lobby shareholders to try to secure their votes in favour of the current board.
This could be fun ...
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1. Posted by Jake on February 10, 2008 @ 20:11 | Permalink
It's going to be great fun watching Microsoft, to the dismay of its shareholders, do everything in it power to pay too much for Yahoo.
2. Posted by Lawrence Cunningham on February 11, 2008 @ 16:02 | Permalink
Why not stick at $31 and wage the proxy fight?
Yahoo has no staggered board and its annual meeting is in June. Its poison pill triggers only upon the acquisition of a 15% voting position.
Offering more can easily become too expesnive and, in a friendly deal, plays to Yahoo's Board.
Offering more in a hostile tender offer comes up against Yahoo's pill (as well as Delaware's anti-takeover statute banning deals with a hostile 15% holder unless tight conditions are met). And Yahoo could sustain a "business culture" type argument if push comes to shove in Delaware courts. See Paramount v. Time.
The proxy fight route does pose a timing issue, with the meeting months away. That gives Yahoo's Board wiggle time. It has blank check preferred to issue. If things don't work out with Google or AOL, it could look to its partners in China. But those look like long shots.
Patience does seem prudent, but battles for corporate control seldom promote that virtue.
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