Both companies are weighing options to end the stand off but in different ways.
Microsoft Corp. Chief Executive Officer Steve Ballmer is weighing options to oust Yahoo! Inc.’s board and pave the way for a takeover, after the Internet company let his deadline pass without agreeing to a deal.
Yahoo’s board is weighing options to counter Microsoft onslaught. They let the dead line pass this Saturday.
Those who know about Oracle’s take over of PeopleSoft know this proxy war can turn ugly. Ballmer gave Yahoo an ultimatum to accept a $44.6 billion bid by last weekend. Now he is left to decide whether to walk away or begin the company’s first hostile takeover battle. If he fights, he has to consider if he should continue to hold firm on the price or offer a better deal to win over shareholders.
According to Sachin Shah, an analyst for ICAP Securities in Jersey City, New Jersey:
After all this talk of Google being king of online advertising and so much media coverage Microsoft can’t afford to let Yahoo go.
To crack Google Inc.’s dominance of the Internet advertising market, Microsoft is looking to handle more Web searches, sell advertisements with more graphics and videos, and be able to target campaigns and track their success.
Microsoft does need Yahoo. If they didn’t, they would have walked away a long time ago.
said Shah, a merger- arbitrage analyst, in an interview with Bloomberg Television last week.
Microsoft has got several options including a proxy fight or walking away from the offer and building Microsoft’s Web unit without Sunnyvale, California-based Yahoo, using other investments and partnerships, Chief Financial Officer Chris Liddell said. Another option is to go like Oracle did against PeopleSoft a few years ago.
Some Microsoft investors say Yahoo CEO Jerry Yang would lose a proxy fight unless he finds an alternative that will boost his company’s shares. Much of the stock is held by arbitragers who would accept $31, said Walter Price, a portfolio manager at RCM Capital Management in San Francisco. The firm owns Microsoft and Yahoo shares.
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