Microsoft moved swiftly in response to yesterday's news that Yahoo is closing in on a deal with AOL. The software giant is reportedly joining forces with News. Corp. to submit a joint offer for Yahoo.
The News Corp.-Microsoft alliance was reported by the Wall Street Journal and the New York Times.
Under the agreement, News Corp. would throw in some cash to buy Yahoo, and the three companies (Microsoft, Yahoo and News Corp.) would presumably combine their online assets, which include MSN, Yahoo and MySpace. The Times says it's a shift in strategy for News Corp. CEO Rupert Murdoch, who reportedly met with Yahoo CEO Jerry Yang early on and offered to help fend off Microsoft.
Under the terms of the Yahoo-AOL deal, Time Warner would pawn off AOL assets (excluding the dialup ISP) on Yahoo, put up a cash investment in the combined company, and take a 20 percent equity stake in it. Yahoo would use the Time Warner cash to buy back a few billion dollars in stock to drive the share price back up, thus potentially appeasing disgruntled investors.
It's not really clear that the AOL agreement would do much to satisfy unhappy investors, though. Yahoo would still be plagued by the same operational problems that it had before the Microsoft takeover bid. And winning AOL, which may be valued at $10 billion under the arrangement, isn't much of a prize.
"We think shareholders would prefer to cash out via a Microsoft offer — with or without News Corp. — rather than keep Yahoo in the hands of current Yahoo management with the addition of a troubled asset called AOL," says Laura Martin, an analyst with Soleil-Media Metrics. "I think Yahoo management has lost its credibility in terms of execution and strategy — not just because of its operational weakness, but also because of how they have handled the Microsoft bid."
The developments are unfolding just days after Microsoft CEO Steve Ballmer served Yahoo with an ultimatum: If a deal is not sealed in three weeks time (which implies a deadline of April 26), Microsoft will launch a proxy battle to take over Yahoo's board.
Yahoo responded to the threat on Monday by suggesting the ball was in Microsoft's court. "We continue to believe that your proposal is not in the best interests of Yahoo and our stockholders," a letter from Jerry Yang and chairman Roy Bostock said. The letter also said the board wasn't opposed to a deal with Microsoft, but not for $31 per share.
GTO :
The developments are unfolding just days after Microsoft CEO Steve Ballmer served Yahoo with an ultimatum: If a deal is not sealed in three weeks time (which implies a deadline of April 26), Microsoft will launch a proxy battle to take over Yahoo's
board.That is M$ for yea,if you don't give us your stuff we will take from you.
I know that engilsh is not my first language but is this conceder a double negative?? ( "The letter also said the board wasn't opposed to a deal with Microsoft, but not for $31 per share.")
GTO
