Yahoo ready to deal after Microsoft ultimatum

 

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By Barry Collins and Reuters

Posted on 7 Apr 2008 at 08:20

Yahoo is not opposed to a Microsoft takeover but wants the software giant to pay more than $31 a share for the company, Yahoo plans to say in a letter to Microsoft.

In the letter to be sent today, Yahoo is also expected to reject Microsoft's suggestion that its business is deteriorating, according to a source close to the internet firm.

Microsoft chief executive Steve Ballmer sent a letter to Yahoo's board on Saturday, threatening to lower his company's bid and appeal directly to Yahoo's shareholders if the company does not agree to a deal in the next three weeks.

"It has now been more than two months since we made our proposal to acquire Yahoo at a 62% premium," Ballmer wrote to Yahoo's board of directors.

"Our goal in making such a generous offer was to create the basis for a speedy and ultimately friendly transaction. Despite this, the pace of the last two months has been anything but speedy."

Ballmer also accused the company of putting obstacles in the path of the takeover. "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," he said.

"At the same time, public indicators suggest that Yahoo's search and page view shares have declined. Finally, you have adopted new plans at the company that have made any change of control more costly."

And Ballmer issued a clear threat to the Yahoo board should it continue to dither. "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."

"It is unfortunate that by choosing not to enter into substantive negotiations with us, you have failed to give due consideration to a transaction that has tremendous benefits for Yahoo's shareholders and employees.

"We think it is critically important not to let this window of opportunity pass," Ballmer concluded.