Yahoo set to snub Microsoft

 

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By Reuters

Posted on 11 Feb 2008 at 07:46

Yahoo is set to reject Microsoft's bid for the company as too low - the first clear signal the board might be prepared to negotiate and sell the internet media giant.

The Wall Street Journal has quoted an unnamed source as saying Microsoft's offer of $31 per share was an attempt to "steal" the company and that Yahoo was unlikely to consider anything under $40 per share - double its price in January.

Microsoft's falling share price has seen the value of the bid dip from $44 billion to $42 billion since the software giant first made its move 10 days ago.

At $40 per share, the value of the cash and stock deal would be worth $51.1 billion. If completed, a merger of Microsoft and Yahoo would be the world's largest of two technology companies.

Yahoo has been considering options, including negotiating a higher price and striking a deal for rival Google to take over its search operations to keep Yahoo independent, the Journal claims.

No other offers

No alternate bidder has emerged and Wall Street has been betting that the likeliest outcome is for Yahoo board's to negotiate for a higher price from Microsoft.

"Are they really seriously about nothing less than $40 or is it a negotiating tactic to try to get a richer price?" asks Global Crown Capital analyst, Martin Pyykkonen. "To me it sounds like a counter-negotiation tactic. Maybe they end up settling for $35, $36 or $37 a share."

Microsoft's initial offer fails to take account of the risks that a merger between the world's largest software maker and Yahoo would be rejected by regulators, the Journal reports, citing "a person familiar with the situation."

A spokeswoman for Yahoo declined to comment on the proceedings of the company's board. A Microsoft spokesman also declined to comment.