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Is Microsoft Re-evaluating Its $44.6BN Yahoo! Offer?

As a US recession potentially looms, Redmond begin to wonder whether $31 a share is too much for Yahoo!
By Search News Desk
Article Rating:
April 5, 2008 06:15 AM EDT
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 5,206
The $31 a share offer for Yahoo! that Microsoft made on Jan. 31 was 62% higher than Yahoo!'s closing price the day before the offer was disclosed. So with the Fed Chairman saying the U.S. may be in a recession after losses tied to the collapse of the subprime mortgage market, it would hardly be surprising if the world's largest software company didn't revisit the offer terms and begin to wonder whether $31 a share is too much. And now Bloomberg.com is reporting that this is exactly what's happening.

"The possibility of a lower bid may step up pressure on Yahoo Chief Executive Officer Jerry Yang, who had sought an alternative that would appeal to investors," says Bloomberg's Ari Levy and Ian King.

Meantime Michael Arrington over at TechCrunch writes:

"Yahoo’s key message is that they want a deal to happen but at a higher bid than the 62% premium Microsoft originally offered. Microsoft’s key message is that the economy has gone south since their original bid, and if they make a new offer it’s going to be lower, not higher. Importantly, they are also threatening to simply walk away from the deal."


[from Michael Arrington's TechCrunch]

The Wall Street Journal summarizes the situation as follows:

"Yahoo's board rejected Microsoft's original bid in February, and Yahoo's senior management may see no point in holding talks on the basis of that offer.

Microsoft appears to be betting that the slowing economy will undercut Yahoo's performance and prompt shareholders to pressure management and the board to reconsider its offer."

The Journal reports that senior executives from the two companies met during the course of the week to discuss Microsoft's proposal "but failed to resolve any of their differences, according to people familiar with the matter."

The meeting apparently took place near Yahoo! headquarters in Sunnyvale, CA, and the Journal notes that it is the second time top executives from the two companies have met in recent weeks. Neither meeting, says the Journal's Matthew Karnitschnig, included bankers.


Published April 5, 2008 – Reads 5,206
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No-Go 04/05/08 06:37:56 AM EDT

No deal appears to be imminent.