Investors to Yahoo: Nice Game Face, But Cut a Deal With Microsoft

Brian.oco 0 256 Views

Today's trading was flat, with most of the tech news coming from the Yahoo & Microsoft camps. Microsoft seems to be getting all Tony Soprano-like on the Yahoo board, issuing a pointed letter that emphasized an April 26 deadline for accepting its $44.6 billion takeover bid for the mega-web portal.

Reportedly, Microsoft chief Steve Ballmer threatened Yahoo, saying if its board of directors board doesn't relent, he would slash Microsoft bid's and demand that Yahoo's shareholders request a new board that would see things in their favor - and in Microsoft's favor, as well.

Yahoo returned fire with a defiant letter of its own that seemed to up the ante up on the hostility meter. Yahoo chief executive Jerry Yang said in a Monday letter that Microsoft CEO Steve Ballmer hasn't done enough to make the merger happen. Various press reports cites Ballmer as being at least two informal meetings between Yahoo and Microsoft, but couldn't say what impact or influence he had on the merger talks.

The latest mail missive could be the last gasp for Yahoo, which has seen its financial fortunes spiraling downward over the past two years. A growing number of Wall Street types are saying that Microsoft and Yahoo will wind up either forging a civil takeover by the end of April. If not, the Yahoo board may have the final say, with both Yang and Ballmer sure to throw their weight around to get a deal deal - in each's favor, of course.

"They both have some leverage, but the greatest leverage still appears to rest with Microsoft," Morton Pierce, a Washington, D.C., lawyer who advises on corporate mergers and acquisitions, told the Associated Press.

Still, Yahoo isn't backing down. "We are steadfast in our commitment to choosing a path that maximizes stockholder value and we will not allow you or anyone else to acquire the company for anything less than its full value," Yang wrote Ballmer.

Analysts don't think that Microsoft will go much higher. According to the AP, the Yang letter "didn't specify how much Yahoo believes it's worth, but some analysts have estimated that Microsoft could afford to pay as much as $34 or $35 per share -- about $50 billion."

All well and good - if the tech stock market hadn't dropped and brought the value of the Microsoft-Yahoo deal down with it. Since the original February takeover bid, Microsoft's stock has fallen 11%. Yahoo's stock has fared even worse, with the AP estimating that its stock would be trading at $15 per share, if not for the inflated value of the Microsoft bid. Yahoo was trading around $27 per share in Monday trading.

Yahoo's next shareholder meeting is July 12. Microsoft could force a vote on its takeover bid, analysts say.

Expect the crossfire to continue for the next three months - with Yahoo capitulating in the end at a bid averaging about $33 per share.

Dani AI

Generated

Good recap, . Public back-and-forth and media leaks are almost always negotiation tools meant to shape shareholder sentiment and pressure the other side. Headlines move prices; the substance that determines whether a deal closes is the formal process and the paperwork that follows.

Practical signals to watch next: SEC and corporate filings (look for Schedule 13D activity, 8-Ks, insider Form 4s, the target board's 14D-9 or DEF 14A/proxy materials), any independent fairness opinion or special committee disclosures, and whether the board adopts defensive measures (shareholder rights plan, lockups, or a proxy contest). Institutional investor statements and activist filings are particularly consequential — they can flip leverage quickly.

How investors should respond: avoid trading on emotion from every headline. Public offers create a volatility-driven spread between market price and deal value; set clear rules for selling vs holding, account for tax consequences of tendering, and read the proxy/fairness materials before voting. Treat a public negotiation as a multi-week event with predictable phases — escalation, formal filings, possible regulatory review, then a vote or withdrawal — and size positions to survive the volatility you expect.

Context note: media posturing can force faster moves, but it does not substitute for fiduciary and regulatory process. Use the filings and board disclosures to build a timeline and a risk checklist, and compare this case to past tender offers and proxy fights to calibrate likely outcomes rather than reacting to each new sound bite.

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