Microsoft Presses Ahead With Yahoo! Offer

NEW YORK Less than a day after Yahoo! rejected its $44.6 billion acquisition offer, Microsoft reiterated its proposal without changing the terms.
In a statement, Microsoft called the rejection “unfortunate” and vowed to “consummate a transaction.” It went on to say it would “pursue all necessary steps” to get the proposal in front of Yahoo! shareholders.

Microsoft, however, stopped short of taking a more aggressive option, such as making a tender offer to shareholders. It also did not raise the financial terms of its bid, which calls for Yahoo! shareholders to get $31 per share, half in stock and half in cash.
“We are offering shareholders superior value and the opportunity to participate in the upside of the combined company,” Microsoft said in its statement. “The combination offers an exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market.”
Yahoo!’s board of directors this morning sent a letter to Microsoft rejecting its bid as “massively undervaluing” the company. The offer is a 61 percent premium to Yahoo!’s stock price when the offer was made last week.

Some financial analysts see the rejection as a ploy to drive up the offer price. RBC Capital Markets analyst Jordan Rohan issued a research note today, predicting the move would cause Microsoft to bump up its offer to the “mid $30s.” It also noted that, barring an unforeseen alternative option, Yahoo! is unlikely to have an attractive alternative option.

The Times of London today reported Yahoo! might consider a tie-up with AOL to stave off Microsoft.