Yahoo rebuffs Microsoft’s advances, again

By Staff Writers on Apr 8, 2008 2:17PM

Yahoo has rejected yet another aggressive advance from Microsoft in which the software giant issued a three-week ultimatum: either accept a US$44.6 billion buyout offer or face an ugly proxy battle.

During the past weekend, Microsoft chief executive, Steve Ballmer, sent an open letter to Yahoo that warned that if the Internet search company failed to agree to its proposed financial terms within a three-week deadline, Microsoft would take its offer direct to shareholders and instigate a proxy contest to elect an alternative board of directors.

In similar style, Yahoo fired back a letter yesterday, dismissing Microsoft’s threat of a proxy battle as counterproductive.

"Our board's view of your proposal has not changed," said the letter, signed by Yahoo chairman Roy Bostock and chief executive Jerry Yang. "We continue to believe that your proposal is not in the best interests of Yahoo and our stockholders."

The letter suggested Yahoo would only be open to a merger if Microsoft sweetened its US$44.6 billion bid.

“We have continued to make clear that we are not opposed to a transaction with Microsoft if it is in the best interests of our stockholders. Our position is simply that any transaction must be at a value that fully reflects the value of Yahoo!,” the letter said.

Yang and Bostock also expressed concern over Ballmer’s wording in Microsoft’s letter, saying it mischaracterised the nature of their talks so far. They said Ballmer’s assertion that Yahoo had refused to enter into negotiations to conclude an agreement were "particularly curious".

“Your comment that we have refused to enter into negotiations to conclude an agreement are particularly curious given we have already rejected your initial proposal … for substantially undervaluing Yahoo!.”

“Moreover, Steve, you personally attended two of these meetings and could have advanced discussions in any way you saw fit,” the letter states.

Yahoo's Yang also criticised Microsoft for not providing it with data that would help the companies identify regulatory issues arising from antitrust issues that might be associated with any merger. Yahoo said it has already provided Microsoft with such details.