With Microsoft and Yahoo! quiet on merger talks over the weekend, this week promises fireworks, including a possible hostile takeover bid.
Microsoft’s deadline for Yahoo! to respond to its $31-a-share cash-and-stock offer came and went Saturday, and both tech giants remained silent through late yesterday, despite some reports that Yahoo!’s board of directors was slated to meet.
Talks failed to materialize as Microsoft CEO Steve Ballmer failed to raise his bid, sources said. While Yahoo!’s management has insisted the company is worth $40 a share, key Yahoo! shareholders have signaled they’re looking for an offer somewhere in the middle.
“Yang and Ballmer need to get together without boards and bankers and talk about catching/beating Google,” one Yahoo! shareholder told The Post. The “easy way to do that is negotiate a friendly deal at $33 to $34 and/or cash, and get after it.”
Sources indicated there’s still a chance to avert a hostile scenario, noting that both CEOs may have eased their stances since they reported lackluster earnings last week.
Indeed, Yahoo!’s disappointing quarterly profit hurt its contention that Microsoft’s offer, initially worth $44.6 billion when made in February, is “substantially undervalued.” Meanwhile, Microsoft released sub-par results that hit its shares and lowered the value of its cash-and-stock bid to $29.68 a share as of Friday’s closing.
A raised Microsoft bid might stem a potential talent drain at Yahoo! that would be risked with any hostile offer. A raised bid also might be a better option for Microsoft than going it alone without Yahoo! in a costly battle against Google for dominance over the Internet.
“Nobody believes they are walking,” one source close to Yahoo! said of Microsoft. “If they really were they would just walk without all the craziness and deadlines.”
Nevertheless, many supposed that Microsoft is gearing up for a proxy battle to shake up Yahoo!’s board, replacing it with a more merger-friendly slate of directors. Microsoft has said such a scenario could mean a lowered bid. Late last week, Microsoft’s Ballmer said he saw no reason to raise his offer, and that he’s still willing to go hostile.