Yahoo prepared to accept takeover if Microsoft improves offer

Internet company Yahoo has, in principle, accepted a takeover by software giant Microsoft - but the offer on the table is still too low, said the Yahoo boss in an open letter to Microsoft on Monday. Microsoft had handed Yahoo an ultimatum at the weekend: if they could not reach agreement within three weeks, they would attempt a hostile takeover.

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Yahoo boss Jerry Yang points out in his letter that Yahoo rejected the initial offer of $45m (€29m) two months ago because it substantially undervalued Yahoo. Since then, Microsoft's share price had fallen, making the offer even less attractive. Microsoft wants to acquire Yahoo to help it break the stranglehold of rival Google in web searching and online advertising.

Since the Yahoo board of directors' first statement on the Microsoft's offer, a number of things have happened to increase the value of the business: the presentation of a three-year financial and strategic plan, the disclosure of new offers, and today, the announcement of the first detailed plans on the AMP web platform. This platform is expected to boost the lucrative online graphic advertising business in which Yahoo is market leader. AMP will be rolled out in late summer or autumn, making it easier for partners to more precisely target their advertising. Yahoo had already exasperated its partners with the seriously delayed launch of its previous search advertising platform, Panama.

The Yahoo board of directors, says the letter, remain convinced that the proposal is not in the best interests of the company or its shareholders, a view, the letter continues, that has already been endorsed by many shareholders. At the same time, says Yang, Yahoo has been exploring alternatives to a takeover by Microsoft and was surprised to learn of Microsoft's threat to reduce its offer when Yahoo had already stated publicly that it found the previous offer too low.

Yang regrets that Ballmer's letter mis-characterised the nature of the previous discussions between the two companies, which had been constructive and had covered important ground, such as integration and regulatory issues. The Yahoo board had been concerned about possible regulatory problems and asked Microsoft for information on the possible legal ramifications of a takeover. Yang says that Microsoft has not provided any of the requested information.

(trk)