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Hostile takeover looms as Yahoo ignores Microsoft's ultimatum

Posted: 29 Apr 2008 ?? ?Print Version ?Bookmark and Share

Keywords:hostile takeover? acquisition bid? Microsoft ultimatum?

Microsoft Corp.'s three-week deadline for Yahoo Inc. to accept its $44.6 billion offer expired at midnight Apr. 27, setting the stage for a hostile takeover bid by the software giant, according to Agence France Presse.

The expiration of ultimatum, without comment from either party, is now perceived to pave the way for an ugly proxy battlea fight by Microsoft for a vote by Yahoo shareholders to place pro-Microsoft officials on its board of directors.

In an open letter to the Yahoo board of directors April 5, Microsoft CEO Steve Ballmer gave the Internet service firm three weeks to accept the $31-a-share takeover offer or face a proxy fight. Yahoo's board of directors, however, maintained its claim, saying the offer "substantially undervalues" the firm, insisting the search engine pioneer is worth at least 40 dollars a share.

Microsoft chief financial officer Chris Liddell disclosed Apr. 24 that the software giant is standing by the April 26 deadline. He added that the Microsoft will not increase the bid just because it can afford to do so, and that unless it makes progress with Yahoo on the deadline, it will explore its alternatives.

Microsoft's other alternatives include withdrawing its offer, a move that could outrage Yahoo shareholders who have seen the software firm's offer sharply push up Yahoo's share price. Some have even threatened to sue the search engine firm's board for failing to maximize the value of their investment.

To avoid the takeover, Yahoo has sought a strategic tie-up with a "white knight," reportedly seeing possible alliances with MySpace, owned by Rupert Murdoch's News Corp., and with Time Warner's faded Internet star America Online. Yahoo has even partnered with Google for its AdSense search service, which will deliver relevant Google ads alongside Yahoo's own search results.

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