Microsoft mails threat to Yahoo

AN EMAIL FROM Microsoft's Steve Ballmer to the Yahoo board on Saturday, delivered the threat that if Yahoo didn’t agree to the Vole’s buyout terms within three weeks, they would be forced to make a reduced offer to Yahoo’s shareholders themselves.

In his email to the Yahoo board, Ballmer wrote of his disappointment that “While there has been some limited interaction between management of our two companies, there has been no meaningful negotiation to conclude an agreement”, and that if Yahoo didn’t agree to the deal by the end of the three-week deadline, Microsoft would do its utmost to kick out the Yahoo board and replace it with a more Microsoft compatible version.

Yahoo had previously sniffed at Microsoft’s offer of cash and stock, initially valued at $44.6 billion ($31 a share), which, after a drop in the Vole’s stock prices, is now worth only about $42 billion. Yahoo had previously said that it believes, "Microsoft's proposal substantially undervalues Yahoo! including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments."

But Microsoft has been unwavering in its offer, which represents a 62 per cent premium over Yahoo’s closing price on Jan. 31, calling it “generous” and refusing to raise it. Ballmer’s email also notes that, since the offer was made, the stock market has dropped significantly leaving Yahoo in an even weaker position than they started with.

In Ballmer’s whispered words, "By any fair measure, the large premium we offered in January is even more significant today. We believe that the majority of your shareholders share this assessment, even after reviewing your public disclosures relating to your future prospects."

Ballmer also mentioned that the Vole was well aware of Yahoo’s desperate scramble around to find mates that would save it from the clutches of Mightysoft and their increasingly hostile takeover. But, in so many words, Ballmer also smugly concluded that resistance was futile and that, not only would they end up taking over Yahoo, but that Yahoo shareholders might well be more than a little peeved at the fact the company had turned down a pretty good deal at the get go, resulting in months of unhelpful stalling.

The Vole’s was the "only alternative put forward that offers your shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers and consumers”, added Ballmer.

Ballmer’s email may have been meant to force Yahoo’s hand, but what it really shows is just how badly the Vole really wants the deal to happen. After two months of relative nonchalance, the Vole is finally starting to rattle Yahoo’s cage, and believes that Yahoo should be afraid, very afraid. But to find out just who wins this game of “chicken”, we may all have to wait three weeks. µ

L’Inq
Balmer's email to Yahoo