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Yahoo spurns Microsoft bid, software giant presses on

Posted: 13 Feb 2008 ?? ?Print Version ?Bookmark and Share

Keywords:Yahoo takeover? Microsoft bid? search engine?

Yahoo Inc.'s board of directors rejected Microsoft Corp.'s buyout offer Feb. 11, saying that the $44.6 billion-dollar bid is too low and not what's best for its shareholders.

This is according to an Agence France-Presse report, which stated that hours after the decline, the software giant urged Yahoo to reconsider its bid to combine the companies, saying the merger offers "superior value" to Yahoo shareholders.

In its statement, Yahoo said its board had decided "after careful evaluation" that Microsoft's bid "substantially undervalues Yahoo." The board then "concluded that the proposal is not in the best interests" of Yahoo and its stockholders.

In reaction, Microsoft said Yahoo's decision was "unfortunate," insisting that its bid was "full and fair." In a statement, the software company said it "reserves the right to pursue all necessary steps to ensure that Yahoo's shareholders are provided with the opportunity to realize the value inherent in our proposal."

Microsoft unveiled Feb. 1 what it called "a generous" offer to take over Yahoo, in an effort to merge the companies to take on search and advertising behemoth Google. Microsoft offered $31 per share, a 62-percent premium above Yahoo's closing price a day earlier.

Analysts said Yahoo's statement suggests it is holding out for a better price, and guarding against potential lawsuits from stockholders.

Microsoft said it is willing to tap into financial markets and leverage a buyout for the first time since it was founded in 1975. The software firm believes the merger with Yahoo would lead to cost savings of a billion dollar per year.

However, Yahoo CEO Jerry Yang sent a message to employees last week, assuring them the firm is exploring ways to avoid a Microsoft takeover. "Our board is thoughtfully evaluating a wide range of potential strategic alternatives in what is a complex and evolving landscape," the email stated.

Google, on the other hand, declared Microsoft's effort as an attack on "the underlying principles of the Internet: openness and innovation."

Reports also surfaced early this week that another option being considered by Yahoo is merging with America Online (AOL), now owned by Time Warner.

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