Yahoo formally rejects Microsoft’s bid to acquire their company in this press release:
Yahoo! Board of Directors Says Microsoft’s Proposal Substantially Undervalues Yahoo!
SUNNYVALE, Calif., Feb 11, 2008 (BUSINESS WIRE) — Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company, today said the Yahoo! Board of Directors has carefully reviewed Microsoft’s unsolicited proposal with Yahoo!’s management team and financial and legal advisors and has unanimously concluded that the proposal is not in the best interests of Yahoo! and our stockholders.
After careful evaluation, the Board believes that 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. The Board of Directors is continually evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximize value for all stockholders.
Goldman, Sachs & Co., Lehman Brothers and Moelis & Company are acting as financial advisors to Yahoo!. Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to Yahoo!, and Munger Tolles & Olson LLP is acting as counsel to the outside directors of Yahoo!.
Yahoo states that the minimum they will accept is $40/share for their shareholders, which amounts to approximately 12 billion dollars (more than the $44 billion offer already on the table).
Amid all the speculation, many insiders believe this is just a “polite” way to ask more money in the deal. Microsoft’s stock slipped 14% since their announcement to acquire Yahoo, from $32.60 to $28.00 a share this morning. Conversely, Yahoo’s stock jumped 35%.
Further, now that Yahoo is call the shots in this deal, rumors speculate Yahoo may merge with AOL. As crazy as it sounds, it will help MicroHoo-OL compete against the likes of Google. I imagine this will be a tough one to sell to the shareholders with all the history AOL has with TimeWarner, but it’s possible.
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UPDATE: Microsoft responds to Yahoo’s response.