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Microsoft Leaks Willingness to Raise Yahoo Offer to $32-$33; YHOO Wants $37
Posted Apr 30, 2008 04:37pm EDT by Henry Blodget in Investing, Internet, Venture Capital, M and A, IPOs
From Silicon Alley Insider, April 30, 2008:
Microsoft (MSFT) leaks in the Wall Street Journal news that it is willing to pay $32-$33 for Yahoo--in a last attempt to get Yahoo (YHOO) shareholders to pressure the board to sell. It adds that Yahoo's board wants "upper $30s." As at the start of this process, $34-$35 should get the deal done.
This leak is obviously a calculated attempt to dangle another few dollars in front of Yahoo shareholders in hopes that they will put pressure on Yahoo to strike a deal. The companies now appear to no more than $4 apart, so a deal suddenly seems a lot more likely. The leak includes the information that Microsoft does not want to pursue a hostile deal and may walk away (Translation: tick-tock, tick-tock).
Microsoft directors are meeting Wednesday to weigh the company's approach in its takeover standoff with Yahoo and an announcement could come following the meeting, say people familiar with the matter.
The people say that it's unclear what final approach Microsoft will take [translation: We still might walk, so take it while you can] but that discussions between the two companies have been stymied by a stark divide on price. Microsoft has said privately in recent days that it's willing to offer as much as $32 or $33 per share, well above the $29.12 value of its original cash-and-stock offer as of Tuesday's market close, these people say. But major Yahoo shareholders have signaled they want in the range of $35 to $37 per share, with Yahoo's management and board similarly shooting for an offer in the upper $30s, they add.
Having failed to reach a friendly deal with Yahoo so far, Microsoft has been lobbying big Yahoo shareholders this week to pressure Yahoo's board, say the people familiar with the matter. Chief Executive Steve Ballmer and Bear Stearns Cos. CEO Alan Schwartz, a Microsoft adviser, have been personally involved in that lobbying effort, the people say. The software giant is reluctant to carry through on its threat to attempt a hostile takeover and it remains possible Microsoft could walk away from its offer, for the time being at least.
The WSJ adds that Yahoo's search deal with Google changed the balance of power in the negotiation, which we expected it might.
Microsoft's board will reportedly follow Steve Ballmer's lead on this decision. Steve has reportedly been waffling in recent days about whether to walk away or raise the bid (so much for the proxy fight).
See Also: Yahoo's Brilliant Search Deal With Google Bolsters Argument for Higher Price
110 Comments
Yahoo! Finance User - Wednesday April 30, 2008 04:20PM EDT
alan schwartz can go to hell and jail but I guess paulson's got his back.
BHALCHANDRA - Wednesday April 30, 2008 04:22PM EDT
WHY SHOULD MSFT PAY HIGHER THAN ORIGINAL OFFER ? NOTHING REALLY HAS IMPROVED AT YAHOO SINCE THE OFFER. THE YAHOO EXECUTIVE ATTITUDE DOES NOT CALL FOR ANY INCREASE IN THE OFFER.
Naga - Wednesday April 30, 2008 04:24PM EDT
Arrogant MicroSOFT needs Yahoo to counter Google. Yahoo does not really need MSoft more than MSoft needs Yahoo. Suck the dollars out of MSoft yahooooooooooo....
DanielR - Wednesday April 30, 2008 04:25PM EDT
I hope this deal gets done. I want to statrt to make money. I hope this will send msft to 100 in the future.
BATO - Wednesday April 30, 2008 04:30PM EDT
Mr. Ballmer you're heading the right direction by not choosing the proxy fight, However, a $32-$35 range might just fall short of what the public sentiment seems to be heading . Anything pass the $35 mark should seal the deal . From there on start rolling up your sleeve and start PRINTING MONEY !!!!
Karen - Wednesday April 30, 2008 04:31PM EDT
Walk! Accumulate shares slowly in the lower 20s and wait till Yahoo shareholders explode.
Yahoo! Finance User - Wednesday April 30, 2008 04:37PM EDT
Run MS run . YHOO is going NOT a good fit, MS board needs to wake up and get out of this while they can. I can take the pain my Yhoo stock will fail if it will save MS from becoming a lesson in how not to chase your tail into failure.
Anne - Wednesday April 30, 2008 04:38PM EDT
AS I'VE SAID FROM THE BEGINNING $34 AND NO MORE! TOMMIE BOY
edward - Wednesday April 30, 2008 04:44PM EDT
As a yahoo shareholder, i would definately take 35, but would take as little as 33. However, Micosoft must pay either in cash, or fixed rate of exchange. None of that floating rate. We saw how a 31 bid turned into a 29 bid over the course of several weeks.
just a man - Wednesday April 30, 2008 04:47PM EDT
So they may offer YHOO the money MSFT would spend on the fight. If they don't take that then walk away and watch the YHOO fireworks.
Jason - Wednesday April 30, 2008 04:47PM EDT
first offer was a low ball. this offer is just about right to make it a pressure sale. we need this in the market right now, mergers/takeovers/aquisitions will help bring our stock market back.
Victor Y - Wednesday April 30, 2008 04:47PM EDT
Yahoo is not even worth half of $37 per share. None of these guys have learned the lessons of the NASDAQ bubble. Read an elementary economics book and you'll see studies show that the majority of mergers do not benefit the shareholders. 1+1 often equals 1.5 in mergers. Executives on the other hand get to manage a bigger corporation and thus demand more compensation. The only person I see benefiting from all this is the speculators of Yahoo stock and the shareholders of google. Yahoo will probably be run into the ground and large and unwielding just like the parent Microsoft.
Kenneth - Wednesday April 30, 2008 04:48PM EDT
This deal will get done. YHOO shareholders are tired of this stock and would be more than happy to offload it at 32-33. They're just playing hard ball right now to get more but when the rubber meets the road, they're more than happy for 32-33 than to see this fall back down to low 20s.
Yahoo! Finance User - Wednesday April 30, 2008 04:52PM EDT
Weird. One side wants to offer 33 / the other will take 35. Where should we go with this. I just can't get my arms around it. Me don't know. Let's call in Mr. Copernicus: (Among the great polymaths of the Renaissance, Copernicus was a mathematician, astronomer, physician, classical scholar, translator, Catholic cleric, jurist, governor, military leader, diplomat and economist.) Copernicus: What do you think? Copernicus:"Go with F'n 34 you giant A'holes."
William - Wednesday April 30, 2008 04:52PM EDT
Who does Yahoo think it is? The stock was below $20 before MSFT launched its bid. Just watch YHOO stock drop right back down if MSFT walks away -- that will teach the greedy Yahoo shareholders a lesson.
Mark - Wednesday April 30, 2008 04:53PM EDT
As a Microsoft shareholder, I'd rather see a deal done today at $35 than a long, drawn-out proxy battle. If MSFT has a business model that can make money with Yahoo in it, let's get on with it. Time is money and my $30 calls expire in July!
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Rogers V - Wednesday April 30, 2008 04:19PM EDT
hope the deal goes down tonight! 35 here we come