Formal Rejection From Yahoo-What went Wrong and What's in Store !!

by Adnani.Seema - April 7, 2009 - 0 comments || tags:Yahoo Publisher Network

Amidst the rumors and speculation surrounding the dying of Microsoft's bid for Yahoo and the expected takeover of Yahoo by Microsoft, Yahoo confirmed the rumors and rejected Microsoft's offer. Both companies have now turned to the war of words. The news came in on Monday when Yahoo officially rejected Microsoft's $44.6 billion stating it as inadequate and substantially undervalued.

Yahoo rejected the bid saying that the bid fails to reflect on the earnings and cash flow potentials of the firm. Yahoo stated that the bid did not sufficiently reflect the value of the global brand created by Yahoo. Yahoo also pointed out that bid not only undervalued the company and its brands, but also its global 500 million users and worldwide audience. The company went further to say that the bid does not consider the recent investments made by Yahoo in various advertising platforms and online ad networks. Yahoo believes that growth prospects of the firm will be seriously marred, if it accepts Microsoft's offer.

Yahoo also feels that the offer will not reflect Yahoo's minority stake in its subsidiary firm, Yahoo Japan Corp. Yahoo believes to work for long term growth and value generation for its customers. Hence, the company is now looking at exploring every other possible strategic partnership options, especially ones related to creating network between online advertising platforms and online publishers. The company is also exploring a partnership with Google regarding advertising platform.

Microsoft, on the other hand, does not seem to be interested in raising its offer for Yahoo. Although there are rumors surrounding the market saying that Microsoft might raise the bid from $31 per share till $35 per share. Whatever rumor has to say, the fact is that there is an increasing pressure upon Microsoft to raise the offer.

The shareholders of this Californian Company do not hold that much patience as Yahoo carries on losing out on market share to competitor firm, Google. Yahoo's founder Yang, on the other side has made all possible moves to keep Yahoo alive and independent. The decline of the proposal has forced certain dissatisfied share holders and institutional investors to sell shares of Yahoo in blocks by forming unions and launching campaigns. The sale may take place either through a proxy contest or through a tender offer.

There are also talks of Microsoft launching a hostile takeover bid for Yahoo. However, proxy veterans believe that, in case of happening of any such event, Yahoo will feel free to go to Department of Justice and to raise the matter against legal authorities regarding antitrust issues. Microsoft can also directly approach the shareholders of Yahoo. However, there is no guarantee that whether the proxy fights can be completed before the 4 weeks time (before March 14) or not. Yahoo is supposed to have its annual nomination process from February 13 till the 14th of March. Hence, the personalities encouraging for merger might change and might move in favor of either party.

In which ever manner the deal may go, Yahoo is having a great time with its share price on a continuous rise. Yahoo is enjoying the attention-courtesy Microsoft!!

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