Here’s a New Offer for You: $29-a-Share After We Withdraw Our Bid and Your Stock Tanks
by John Paczkowski
Posted on February 19, 2008 at 7:38 AM PT
It’s never wise to take an unsolicited buyer’s first offer. But if Yahoo’s waiting for Microsoft to raise its original $31-a-share bid for the company, it’s going to be waiting a long time. Microsoft (MSFT) may be cash-rich and debt-free enough to pay a 62% premium for a declining Internet major. It may be desperate to narrow Google’s lead in the online advertising market. But it’s not certifiable. And it would have to be to offer Yahoo (YHOO) the $40-a-share for which the company’s rumored to be angling–a bid that would be a 109% premium over the $19.18 closing price of Yahoo shares the day before the original offer was announced. Yahoo has about as much chance of getting a $40-a-share offer out of Microsoft as it does reclaiming its long-lost lead in the search market from Google. Just ask Bill Gates.
Interviewed this morning about whether Microsoft was haggling with Yahoo over its rejected hostile buyout, Chairman Bill Gates said that was not the case and gave no indication that the software giant was willing to up its bid. “We sent them a letter and said we think that’s a fair offer,” Gates told the Associated Press. “There’s nothing that’s gone on other than us stating that we think it’s a fair offer. They should take a hard look at it.”
Gates’s comments come amid reports that Microsoft will authorize a proxy fight for Yahoo this week–a move that will cost it quite a bit less than raising its current offer, which would require an additional $1.4 billion for every dollar added.
