Yahoo: Microsoft offer not good enough

Yahoo has thrown a spanner in the works of Microsoft’s acquisition plans by indicating that the US$31 per share offer by the software giant “massively undervalues” the company. The Yahoo board intends to detail its position in a letter to Microsoft.

Despite the proposal adding more than a 60 percent premium to the value of Yahoo shares, the Journal claimed Yahoo believed the offer did not account for the possibility that the deal may be blocked by government regulators.

Analysts speculated that Yahoo may be fishing for an offer around the US$40 per share mark, which would increase the original stock bid by approximately US$12 billion.

Jerry Yang, chief executive, Yahoo allegedly sent an email to staff stating that the board was carefully assessing the situation to ensure the best interests of shareholders and employees are preserved.

“Our board is thoughtfully evaluating a wide range of potential strategic alternatives in what is a complex and evolving landscape,” Yang wrote. “What’s become clear in the past few days is how much people care about this company … we need to do what’s best for Yahoo and our shareholders.”

Microsoft is being accused of taking advantage of Yahoo’s weakened position in the Internet space. The software giant hit back by asserting the offer more than adequately reflected the value of the company.

“We think it’s a generous one,” said Steve Ballmer, chief executive, Microsoft. "We trust the Yahoo board and the Yahoo shareholders will join with us quickly in deciding to move down an integrated path.”

The sincerity of the bid was recently highlighted when Microsoft revealed that for the first time in its history the vendor would acquire debt for a business transaction.