Yesterday we noted that Microsoft (NASDAQ: MSFT) may be close to either lowering its bid or taking other actions in its attempt to acquire Yahoo! (NASDAQ: YHOO). Now the facts are out. Steve Ballmer sent a letter to the Yahoo! board of directors and discussed the 62% premium offer to Yahoo! January 31, 2008.
Ballmer noted that there has been no meaningful negotiation to conclude an agreement while the public equity markets and overall economic conditions have weakened. He also noted that public indicators suggest that Yahoo!’s search and page view shares have declined.
Ballmer set the deadline to reach an agreement within the next three weeks, or Microsoft will go hostile and directly go to shareholders. He will seek to drop change in control procedures, start a proxy contest to elect an alternative slate of directors for the Yahoo! board. and the direct offer to shareholders "will have an undesirable impact on the value"… in short, a lower price will be offered.
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If you’d like to read about Steve Ballmer’s thoughts on the future of search and advertising, Ballmer recently gave some exclusive comments to 247WallSt.com in an interview on this exact topic.
Stay tuned, this one is about to get interesting.
Jon C. Ogg
April 5, 2008
Jon Ogg produces the Special Situation Investing Newsletter; he does not own securities in the companies he covers.