Yahoo Rejects Microsoft Offer

It seems that Yahoo’ s board of directors are positioning themselves for a higher buyout offer from Microsoft.  According to the Wall Street Journal, Yahoo will formally reject Microsoft offer but Yahoo is suggesting it may consider $40 / share.

Yahoo’s board has decided Microsoft’s $31-per-share offer “massively undervalues” the company, according to a report in The Wall Street Journal. Yahoo is expected to formally reject Microsoft’s offer, the Journal reported.

“Massively undervalues” tells me that it is a negotiation tactic.  The reason I believe this is the case is because when the news of Steve Ballmer’s offer was spreading like wildfire, Yahoo’s stock was in the process of a massive decline over the prior year and down under $20.  A company of Yahoo’s standing and success, branding and prominence in the Silicon Valley and globally, has the right to argue that it is worth much more than $31 a share.  Usually, initial offers are either low-ball offers to test the waters, or made to get the negotiation process rolling and expect to pay a premium over that offer price.

It looks like from here on out, it’s a lawyer’s game and I expect Microsoft might bite or maybe make an offer between $35 and $38 dollars a share.  What Yahoo suggests may sound like pocket change in the grand scheme of things for Microsoft, but I am sure the Silicon Valley giant will consider its options and inevitably acquire Yahoo.  The only way this falls through is if a bidding war breaks out with another company that can afford Yahoo.  At that point all bets are off.  One thing is certain, Yahoo is sitting pretty in all of this and I’m pretty sure the board isn’t going to blow this one — stockholders and employees should prepare to celebrate.

Fred is an Attorney, Entrepreneur, and Blogger from the Silicon Valley.
Email this author | All posts by Fred