Those those who haven’t been keeping up, Microsoft is trying to acquire Yahoo! and the latest round of press releases is a bit interesting. Last Friday, Microsoft issued a nice press release chiding Yahoo! for not being willing to play ball. There’s a couple interesting phrases in it that I’d like to comment on:
Finally, you have adopted new plans at the company that have made any change of control more costly.
So MS is upset because Y! has taken steps to make a takeover harder? Umm… excuse me, isn’t that what a company is suppose to do when facing a potentially hostel takeover? And, take a gander at this:
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.
As far as I can remember, this is the first time I’ve ever seen a threat in a press release. In non-legalese, MS is telling Y! to sell now or they’ll start a proxy battle which will drive share prices down, and then MS will buy Y! out for even less than they’ve offered.
Over the weekend, a lot of people were wondering how Yahoo! would respond to the Redmond giant. This morning they responded by pointing out all the holes in Microsoft’s press release.
Our Board’s view of your proposal has not changed. We continue to believe that your proposal is not in the best interests of Yahoo! and our stockholders. Contrary to statements in your letter, stockholders representing a significant portion of our outstanding shares have indicated to us that your proposal substantially undervalues Yahoo!. Furthermore, as a result of the decrease in your own stock price, the value of your proposal today is significantly lower than it was when you made your initial proposal.
Here Y! takes a line from Oceans 13. “Well, I know all the guys that you’d hire to come after me, and they like me better than you. ” Yahoo subtly lets MS know they’ve already spoken with the major shareholders who’s support MS would need for the proxy battle and those shareholders agree that the offer was to low. Then they point out that since MS’s offer was ½ stock and the MS stock has declined, then the value of the offer has declined. And I loved this line, in response to MS’s comment about no meaningful meetings:
Moreover, Steve, you personally attended two of these meetings and could have advanced discussions in any way you saw fit.
And they closed their press release quite nicely with
In conclusion, please allow us to restate our position, so there can be no confusion. We are open to all alternatives that maximize stockholder value. To be clear, this includes a transaction with Microsoft if it represents a price that fully recognizes the value of Yahoo! on a standalone basis and to Microsoft, is superior to our other alternatives, and provides certainty of value and certainty of closing. Lastly, we are steadfast in our commitment to choosing a path that maximizes stockholder value and we will not allow you or anyone else to acquire the company for anything less than its full value.
So, basically, Y! is saying “either put up or shut up; we’re not afraid of your threats.” And now let us all sit back and continue to watch as this Internet soap opera continues…
