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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
Jonathan - Wednesday April 30, 2008 04:54PM EDT
If MSFT were willing to walk away they would have done it by now. A fixed $34-$35 will probably get it done. $37 on the variable side.
Josh - Wednesday April 30, 2008 04:57PM EDT
A great deal if it comes together. Watch out Google! Microsoft has shown there is no area of growth it's not going to try to compete in.
Ome - Wednesday April 30, 2008 04:57PM EDT
For just 15% of the market share? MSFT should stick with 33!
Frank - Wednesday April 30, 2008 04:58PM EDT
This may not be as bad as Time Warner and AOL, but it might be close. Microsoft - stay away! YHOO is going downhill. Buy it in 2010 for $10 per share if you must waste your money.
george - Wednesday April 30, 2008 04:59PM EDT
hello Mr.softy! would you stop nd walk-awy , so I an pa some yhoo a 15 /16dollars.
Gerald - Wednesday April 30, 2008 05:04PM EDT
MSFT its only money........ and the only way to catch Google
Yahoo! Finance User - Wednesday April 30, 2008 05:04PM EDT
YHOO viewed this all wrong...if their stock is undervalued then why was it below 20 before all of this? MSFT should walk....watch YHOO tumble and re-visit after YHOO's shareholders have beat YHOO's board silly. Always leave them wanting more..- George Castanza
JJ - Wednesday April 30, 2008 05:05PM EDT
yahoo might not need microsoft, but yahoo's shareholders need them badly now, so stop crying. With incompetent CEO, jerry yang, and the future prospect of yahoo, there is no way yahoo is going be worth anywhere need msft's original offer, $29 now. so you, yahoo shareholders, should be giggling that msft didnt walk away and leave you all with a $20 per stock price. Again, with yahoo's board and management, there is no such way yahoo is going to turnover as long as there is google.
gnelson - Wednesday April 30, 2008 05:12PM EDT
I own $500 shares of YHOO and would be thrilled with the current offer. If I were MSFT, I would walk away. YHOO will trade below $20 right now without the MSFT offer. I would be a LT buyer of YHOO at $20 but no way in heck I would add even at $27 as it is right now. MSFT can take $40 Billion - $22 Billion in cash and get scale from other acquisitions. $2-$3 Billion wasted on VCLK would get some more advertising. Still have $37 Billion left...add in some direct navigation domains...MCHX for $400 million. There are much better plays than YHOO for those greedy boys.
spiz - Wednesday April 30, 2008 05:14PM EDT
YHOO is worth every penny. MSFT wouldn't be even considering buying them out or increasing the deal if they didn't think so. This is a highly competitive modern scene here folks with internet clicking & advertising. This buyout means MSFT moves easily into #2 slot, not too far behind GOOG. & I know that those guys down at MSFT are fantasizing about their stock infating up where GOOG rests. Hold them YHOO stocks & here we go!
Zig Z - Wednesday April 30, 2008 05:16PM EDT
this deal will hamper Mr. Softy for year to come. Don't do it Ballmer.
Randy - Wednesday April 30, 2008 05:18PM EDT
This has turned into a EGO issue.Once the Ego steps back and rethinks the plan a good decision will be made.I think in a nice way MSFT should withdraw its deal.Wait till there is insanity with the yahoo shareholders and revisit the process after 1 or 2 qtrs.
Yahoo! Finance User - Wednesday April 30, 2008 05:18PM EDT
Let's getter done--$35 is the number.
Henry T - Wednesday April 30, 2008 05:23PM EDT
Deal all most finish....why..? 1- the Due-day for that was last weekend..but....untill now the deal still alive....2-Mr. CFO's Msft... look like ... oldman ..talk too lound but in side his heart still in love the young lady Yhoo....3-Msft have cash on hand MUST do something...(...to fight GOOG..)..that is business rule. ..never let $$$ dont move !!! .I think Msft will buy Yhoo about $33- $34...per share..!!!
david - Wednesday April 30, 2008 05:25PM EDT
Msft should stop playing games. Since the orginial offer, you know they low balled the offer. They took (Msft) advantage of yahoo while the stock was low to make an offer. Everyone wants to get a bargin. .ahoo would be important too Msft and to make a fair offer, Msft should increase the price a couple of dollars to show good faith. P.S I don't own either stock.
Yahoo! Finance User - Wednesday April 30, 2008 05:31PM EDT
this acquisition will not strengthen msft. in fact, it is spin off of more complicated networks that microsoft would like to influence. it is a bad idea--i would personally use the money to bid for a major newspaper that would add value to msft shares.
edward - Wednesday April 30, 2008 05:32PM EDT
Here's one reason why Microsoft should not walk away. Once they do, Yahoo will be freed of legal constraints (fiduciary duties) to enact a staggard board. After that, Microsoft will never be able to takeover yahoo. Yahoo is potential money machine...they get more visitors than any site on the web. Microsoft has the business accuity to turn that into dollar profits (maybe integrate yahoo into next operating system?). LETS GET IT DONE AT 35 NOW. Let the future begin.
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Yahoo! Finance User - Wednesday April 30, 2008 04:53PM 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."