There are two very different battles going on between Microsoft and Yahoo. The more interesting side is the behind the scenes attempts to influence press and key shareholders. But this is also playing out publicly. Yahoo leaked this weekend that they were going to turn down the Microsoft offer, and today they came through with the formal rejection.
Microsoft responded quickly via a press release:
MICROSOFT RESPONDS TO YAHOO! ANNOUNCEMENT
Reiterates Full and Fair Proposal for Microsoft-Yahoo! Combination
REDMOND, Wash. — Feb. 11, 2008 — Microsoft Corp. (NASDAQ:MSFT) today issued the following statement in response to the announcement by Yahoo! Inc. (NASDAQ:YHOO) that its Board of Directors has rejected Microsoft’s previously announced proposal to acquire Yahoo!:
It is unfortunate that Yahoo! has not embraced our full and fair proposal to combine our companies. Based on conversations with stakeholders of both companies, we are confident that moving forward promptly to consummate a transaction is in the best interests of all parties.
We are offering shareholders superior value and the opportunity to participate in the upside of the combined company. The combination also offers an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market.
A Microsoft-Yahoo! combination will create a more effective company that would provide greater value and service to our customers. Furthermore, the combination will create a more competitive marketplace by establishing a compelling number two competitor for Internet search and online advertising.
The Yahoo! response does not change our belief in the strategic and financial merits of our proposal. As we have said previously, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!’s shareholders are provided with the opportunity to realize the value inherent in our proposal.
On February 1, 2008, Microsoft announced a proposal to acquire all the outstanding shares of Yahoo! common stock for per share consideration of $31 representing a total equity value of approximately $44.6 billion and a 62 percent premium above the closing price of Yahoo! common stock based on the closing prices of the stocks of both companies on Jan. 31, 2008, the last day of trading prior to Microsoft’s announcement. Microsoft’s proposal would allow the Yahoo! shareholders to elect to receive cash or a fixed number of shares of Microsoft common stock, with the total consideration payable to Yahoo! shareholders consisting of one-half cash and one-half Microsoft common stock.
Founded in 1975, Microsoft (NASDAQ: MSFT) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.
Yahoo says the offer is “massively undervalued.” Microsoft counters that it is a “full and fair proposal” and makes it clear that they won’t back down. Who wins? I still think Microsoft. But I love that Yahoo’s putting up a fight. And I love the ping-pong back and forth public statements, too.