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Yahoo! (YHOO)
Microsoft (MSFT)
$44.6B Bear Hug Offer
Bear Hug Offer
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 Microsoft
bear hugs Yahoo!
- Offer valued at $44.6B on announcement
- $31 per share; half cash - half MSFT stock
- Cash election, subject to proration
- Value of MSFT shares has declined since
announcement
Announced
2.01.08
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Developments
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Yahoo!
enters into search alliance with Google
- "... enables Yahoo! to run ads supplied by
Google alongside Yahoo!s search results and on some of its web properties in
the United States and Canada. The agreement is non-exclusive, giving Yahoo! the
ability to display paid search results from Google, other third parties, and
Yahoo!s own Panama marketplace"
Yahoo!
"concludes talks" with Microsoft
- "... discussions with Microsoft regarding
a potential transaction whether for an acquisition of all of Yahoo! or a
partial acquisition have concluded...Microsoft representatives stated
unequivocally that Microsoft is not interested in pursuing an acquisition of all
of Yahoo!, even at the price range it had previously suggested"
Microsoft
proposes an "alternative transaction"
- "... Microsoft is considering and has raised with Yahoo! an alternative that would involve a transaction with Yahoo! but not an acquisition of all of Yahoo! Microsoft is not proposing to make a new bid to acquire all of Yahoo! at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo! or discussions with shareholders of Yahoo! or Microsoft or with other third parties..."
- "... Yahoo! and its Board of Directors
continue to consider a number of value maximizing strategic alternatives for
Yahoo!, and we remain open to pursuing any transaction which is in the best
interest of our stockholders...."
Yahoo's
response to Icahn letter 5.15.08
Icahn sends letter to board of directors 5.15.08
- Purchased 59 million shares
- Formed a 10-person slate for election against
current board
- Sought anti-trust clearance from the FTC to
acquire $2.5mm stock
- Files preliminary proxy materials 5.19.08
Microsoft
withdrew its proposal on May 3  
- "Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer. After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal, said [CEO] Ballmer."
- Includes letter to Yahoo! board, which explains
that Microsoft didn't launch a hostile offer because of concerns with Yahoo!'s
announced scorched earth plans
- Board needs to be held accountable
- Shares fall 20%; possible pressure from hedge
funds
CEO
Ballmer at MSFT town hall 5.01.08
- Won't pay "a dime above" what he thinks Yahoo!
is worth and they will know the next move in the takeover quest "in very short
order."
- "Can go it alone" - WSJ article
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More news
Yahoo!
and Microsoft in a stand-off
- Yahoo!
reported in discussions with Time Warner - AOL
- Also testing Google's search ad service
- Yahoo! press release 4.09.08
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MSFT response
4.09.08
"Our proposal remains the only alternative put forward that offers Yahoo! shareholders full and fair value for their shares"
Microsoft
sets a deadline
- 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.
- The substantial premium reflected in our initial proposal anticipated a friendly transaction with you. If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company from our perspective which will be reflected in the terms of our proposal.
- .. We are open to all alternatives that maximize stockholder value. To be clear, this includes a transaction with Microsoft if it represents a price that fully recognizes the value of Yahoo! on a standalone basis and to Microsoft, is superior to our other alternatives, and provides certainty of value and certainty of closing.
Yahoo!
increases its forecast
Yahoo
rejects offer
Other
developments
- Offer made immediately after resignation of
Yahoo!'s Chairman
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Advisors
SEC_CODE_REF_0090001192884
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Financial
- YHOO: Goldman Sachs / Lehman / Moelis & Company
- MSFT: Morgan Stanley / Blackstone / Bear
Stearns
Legal
- YHOO: Skadden Arps / Munger Tolles (outside
directors)
- YHOO independent directors: Munger Tolles
- MSFT: Sullivan & Cromwell / Cadwalader
(Antitrust)
Legal
conflict
- Simpson Thacher initially represented MSFT but
was replaced by S&C due to a conflict
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Possible Proxy Fight -
Annual Meeting Date
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Yahoo!
amends by-laws
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Before change, MSFT had to announce an opposition slate of directors no later
than 3.14.08
- See 2007 proxy statement
at page 5
- Running an opposition slate is necessary for MSFT
to make an effective unsolicited bid for Yahoo!
- Cutoff date will now be 10 days after public
announcement of date of 2008 meeting
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Related Topics
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