Microsoft Gives Yahoo! Deadline on Buyout Offer

REDMOND, April 6: Microsoft has given Yahoo! a
deadline of April 26 to reach a deal over its buyout offer, warning that if an
agreement is not clinched it will launch a hostile takeover with a lower
purchase price.

Microsoft made its
$44.6-billion offer for Yahoo! in February. The search engine giant rejected
the bid, arguing that it undervalued the company, and has since pursued
alliances with the likes of News Corporation and other media companies.

In a letter to Yahoo!’s Board of Directors this weekend, Microsoft’s CEO,
Steve Ballmer, noted that the goal of the offer in February “was to create the basis for a speedy and
ultimately friendly transaction. Despite this, the pace of the last two months
has been anything but speedy. While there has been some limited interaction
between management of our two companies, there has been no meaningful
negotiation to conclude an agreement. We understand that you have been meeting
to consider and assess your alternatives, including alternative transactions
with others in the industry, but we’ve seen no indication that you have
authorized Yahoo! management to negotiate with Microsoft.”

Ballmer noted that
in the time since the offer, “public indicators suggest that Yahoo!’s search and page view shares have declined.
Finally, you have adopted new plans at the company that have made any change of
control more costly.”

He continued: “We
believe now is the time for our respective companies to authorize teams to sit
down and negotiate a definitive agreement on a combination of our companies
that will deliver superior value to our respective shareholders, creating a
more efficient and competitive company that will provide greater value and
service to our customers. 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.”

—By Mansha Daswani