Yahoo! confirmed today that the Yahoo! Board of Directors has carefully reviewed Microsoft's unsolicited proposal with Yahoo!'s management team, financial advisors, and legal advisors and has unanimously concluded that the proposal is not in the best interests of Yahoo! and their stockholders.
Yahoo! confirmed today that the Yahoo! Board of Directors has carefully reviewed Microsoft\'s unsolicited proposal with Yahoo!\'s management team, financial advisors, and legal advisors and has unanimously concluded that the proposal is not in the best interests of Yahoo! (Photo: J. Anderson / Yahoo)
"After careful evaluation, the Board believes that Microsoft's proposal substantially undervalues Yahoo! including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments. The Board of Directors is continually evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximize value for all stockholders," a Yahoo! statement said.
The news of the rejection was expected. Over the weekend there were articles and rumors that pointed to all sorts of things that Yahoo! could do. Mostly, the news over the weekend surrounded the risks, and rewards to the merger.
One of the risks, according to Yahoo! insiders, include the fact that regulators would likely reject the merger. The anti-trust issue has been one of the topics covered lately in the press and one of the major factors in merging the two companies. The issue is that Microsoft would stand to gain more than Yahoo! would with the deal. As Wired pointed out, the $31 a share is about $9 less than what was mentioned last year. Also, unlike Microsoft, Yahoo! is still an Internet based and user driven company, the merger with Microsoft could end up being a huge PR failure with the users who made the company what it is today.
Google was another topic brought up over the weekend, centering on how a team-up with Google could help Yahoo!. Last week it was reported that Google CEO, Eric Schmidt called and talked to Yahoo's Jerry Yang offering some support with rebuking the offer form Microsoft. With Google's reach in the online marketing world, the boost could help better position Yahoo! and offer much needed income to the company.
Yahoo!, currently number two in the ranks of marketing online, has invested millions in Panama, their own advertising platform. If you have followed Yahoo! over the last year or so you know Panama was rolled out in stages, but was not as big a hit as expected. Efficiency was the big issue with Panama, it simply could not keep up with Google's own Ad Sense. The problem according to some business watchers and insiders is that while help from Google could be good for Yahoo!, abandoning Panama for Google technology could be seen as a sign of defeat.
Roundup so far:
2008-2-1: Microsoft announced that it had made a proposal to the Yahoo! Board of Directors offering to acquire all the outstanding shares of Yahoo! common stock for just about $31 per share. "The online advertising market is growing at a very fast pace, from over $40 billion in 2007 to nearly $80 billion by 2010. The resulting benefits of scale along with the associated capital costs for advertising platform providers make this a time of industry consolidation and convergence. Today this market is increasingly dominated by one player. Together, Microsoft and Yahoo! can offer a competitive choice while better fulfilling the needs of customers and partners." -- Microsoft statement
2008-2-4: David Drummond, Senior Vice President of Corporate Development and Chief Legal Officer at Google blasts Microsoft saying, "While the Internet rewards competitive innovation, Microsoft has frequently sought to establish proprietary monopolies -- and then leverage its dominance into new, adjacent markets. Could the acquisition of Yahoo! allow Microsoft -- despite its legacy of serious legal and regulatory offenses -- to extend unfair practices from browsers and operating systems to the Internet?"
"The combination of Microsoft and Yahoo! will create a more competitive marketplace by establishing a compelling number two competitor for Internet search and online advertising. The alternative scenarios only lead to less competition on the Internet," said Brad Smith head council for Microsoft.
2008-2-6Later the same week Microsoft unleashed the dogs of Washington (Lobbyists) prompting The House Judiciary Committee Chairman John Conyers, Jr. (D-MI) and Committee Ranking Republican Lamar Smith (R-TX) to announce that the Committee would hold a hearing on “The State of Competition on the Internet.” This Judiciary Committee Task Force on Antitrust and Competition Policy hearing was held on February 8th and included discussion of the proposed Microsoft-Yahoo! merger. (No updates on this meeting have been released)
2008-2-11Yahoo! says no! No! NO!
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