Microsoft Raises Yahoo Offer To $32-$33 Through WSJ; YHOO Wants $37*
This leak is obviously a calulated attempt to dangle another few dollars in front of Yahoo shareholders in hopes that they will put pressure on Yahoo to strike a deal. The companies now appear to no more than $4 apart, so a deal suddenly seems a lot more likely.
Since the leak is designed to spur Yahoo shareholders into action, it includes the information that Microsoft does not want to pursue a hostile deal and may walk away (Translation: tick-tock, tick-tock).
*UPDATE: Since the original story appeared, it has been revised to say that Microsoft's board "failed to reach a decision" today and will now make the decision "later this week." Rather than "failed to reach a decision," we suspect it would be more accurate to say Microsot's board "decided to wait to see how Yahoo responded to the raised offer in the WSJ."
The people say that it's unclear what final approach Microsoft will take [translation: We still might walk, so take it while you can] but that discussions between the two companies have been stymied by a stark divide on price. Microsoft has said privately in recent days that it's willing to offer as much as $32 or $33 per share, well above the $29.12 value of its original cash-and-stock offer as of Tuesday's market close, these people say. But major Yahoo shareholders have signaled they want in the range of $35 to $37 per share, with Yahoo's management and board similarly shooting for an offer in the upper $30s, they add.
Having failed to reach a friendly deal with Yahoo so far, Microsoft has been lobbying big Yahoo shareholders this week to pressure Yahoo's board, say the people familiar with the matter. Chief Executive Steve Ballmer and Bear Stearns Cos. CEO Alan Schwartz, a Microsoft adviser, have been personally involved in that lobbying effort, the people say. The software giant is reluctant to carry through on its threat to attempt a hostile takeover and it remains possible Microsoft could walk away from its offer, for the time being at least.
Microsoft's board will reportedly follow Steve Ballmer's lead on this decision. Steve has reportedly been waffling in recent days about whether to walk away or raise the bid (so much for the proxy fight). We suspect Ballmer and the board may now wait and see what impact this leak has before making their final decision.
This is indeed what we were expecting to see. The interesting part is still to come.
That's a joke... the big shareholders don't need 37 to tender. They'd tender at 35 ass-over-elbows.
No, I think this deal hangs between 33 and 35. It's going to make or break right there, or then go hostile.
I love how yhoo keeps crying we are worth more but the reality is microsofty pulls the offer and the share price goes to 20 bucks. And for the record it is the current management team and I us that term loosely that ran yhoo into the ground with one dumb move after another. The horrendous management team at yahoo has no one to blame but themselves. And let me promise you Jerr the lawsuits will fly bro if you f**k this one up
if they do go to $35, Yahoo has to take the deal correct?
For the love of god.... 35 and end this!
I can't wait to dump my YHOO shares!
I hope to God that this leak gets YHOO to the table and that both parties work out a deal at $34-35.
This is gone on way too long!
It would be irresponsible of them not to.
No downside, save any short-term morale issues.
sheesh - "nazis" was my spam word? nice.
Hey, copycat "joeblow"... How about a little common decency, if you don't mind. Stretch your intellect and come up with a name that doesn't have "joe" or "blow" in it.
If you're my fan "joeblow fan" then please you too... don't step on my nomenclature.
Myass!... I'm only providing him adult supervision, since evidently nobody else here or at SAI does.
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The big shareholders want 37, do they Henry!
Funny.
Yeah, people in hell want icewater too.
There's a really simple solution. It's called a FAPI. That's Freaking Application Programming Interface.
Let your damn ppc interfaces bid on each other's platforms, Yahoo and Microsoft. It accomplishes the same damn thing: building critical mass of advertisers and inventory to compete with google adwords for domination of the internet ppc advertising business.
Mergers and acquisitions are so old school. If Ballmer new his ass from web 2.0, he'd have figured this out.
Yet, you money grubbing internet-clueless investors are going to fubar the whole internet if this acquisition occurs.
Please, please, MSFT. Buy Yahoo! Pay whatever it takes!
Then, for investors: Short MSFT; go strongly long GOOG.
I'm a reporter doing a story about yahoo/microsoft and would like to interview a blogger.
how can i reach anyone that's available?
The only time when it worked in tech was Oracle vs Peoplesoft. The main difference, however, is that Oracle didn't really want Peoplesoft... they wanted PSFT's customers. They didn't care about further innovating it as opposed to capturing PSFT and migrating their customers to Oracle's platform after a few years. PSFT is basically in maintenance mode now, they don't need their best engineers anymore.
The situation is entirely different with Yahoo. Ballmer want's Yahoo to be a burgeoning part of Microsoft's empire, he doesn't want a shell. He wants Yahoo to innovate and maintain and grow their position. You can't do that if you grab it hostilely.
Thus, I think the threats with going hostile was posturing, but it won't come to fruition, because it will be counter-productive to the $45 billion he wants to spend.
I think it's either raise the bid or walk, with the intention of having Yahoo come back and offer itself to MSFT. However it goes down, the merger has to be friendly, otherwise most of what Microsoft is paying for will leave.
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http://online.wsj.com/article/SB120958473573757167.html?mod=yahoo_hs&ru=yahoo
That was no failure. They've told the market through the press that an eventual hostile bid would be at least 33. They've just raised the bid and the thing they probably "failed to do" - if failure is the concept and I think "succeeded to do" is a better phrase for what they did - was that they succeeded in avoiding hammering Yahoo tonight with a slate or a hostile tender... not that they still can't.
So, the bid is raised. Yahoo can counter and MSFT can take it, or find the common sense to bridge whatever remaining gap there is and close the deal easily, or they can go hostile and close it probably for less than Yahoo could get now with just a modicum of cooperation.
So, Yahoo?... You want to go down in flames, or get religion, have a quick prayer meeting and reach a spiritual recognition of your fate?
Otherwise, MSFT is gonna do the nom thing and starve you out, and they'll get it for 33.
After today's tactical move, MSFT could, if necessary, nom the slate without altering the current proposal. That would have been a problem before they leaked the 33.
But now they've altered it through the press, and they could safely nom the slate. All the shareholders know they can get 33 if Yahoo cooperates, and the nom would likely be reasonably well received.
MSFT is giving Yahoo every possible opportunity to cooperate. But they just aren't going to give them anything remotely close to 40... and not over 35 now that Yahoo's board leaked out the "closer to 35" talk. 35-37 might as well be 35-97. They both mean the same thing. Give us 35 and it's done.
Henry & joeblow have this one figured, i'd say the next turn is either a)deal at $34-35 (unlikely) or b)msft walks
I think this is a bad deal for MSFT and they would be over paying. YHOO is lost needs new leadership.
Yahoo's monetization gap is 50-80% according to the TechCrunch interview with Mahaney (Citi Analyst) vs. Google, hence the recent outsource deal.
Read it here (it's long, do a search for "gap" or "monetization"):
http://www.techcrunch.com/2008/04/28/interview-with-citi-analyst-mark-mahaney-on-yahoomicrosoftgoogle/
How will they catch GOOG if they are still busy trying to get the companies merged? This will give Google yet another 12+ months advantage in fine-tuning monetization. Not that they really needed any, they already dominate.
You must've failed to notice... they just effectively raised the bid through the press! That proposal by Ballmer from Feb 1 is about as relevant now in this matter as a Barney Miller re-run. --musical theme-- "Dum-dada-dum... dadda-dum... dadadada-da-dum."
Too, I have never advocated a hostile, except that I have personally calculated that MSFT isn't going to walk and they'll do a hostile if they can't accomplish this amicably with Yang and the board.
The people who believe that MSFT can just drop this matter and begin to spend, spend, spend elsewhere and accomplish the same thing are simply in-sane. They have no concept of what would be involved. It ain't like you can go to the store and lay down 40 bil and tell the sales staff "Gimme some of that... yeah, over there, some of that instant Internet real estate... yeah, that's it... the one you just add hot water and 40 bil to, and it grows like a chia pet."
Too funny!... MSFT would have to spend maybe 100 bil!... or more... before they could build a Yahoo-like substitute by themselves, and they'd have to spend that much because not only would Google be eatin' on their ass while they're trying it, but Yahoo still wouuld be too.
I do remember once commenting that a hostile was unavoidable, but that was prior to the first leaked break Yahoo's 40 demand. Had Yahoo not leaked out an indication that Yang was no longer philosophically frozen against dealing with MSFT (that didn't happen that long ago), I'd still have that opinion, because MSFT ain't gonna pay 40.
I simply cannot divorce myself from the notion that this is a plate of hot pancakes ready for some 34ish syrup.
So much for those "sources close to the deal," the tape told the whole story, it almost always does.
It gets done at $34 as soon as Yahoo figures out a graceful way for eating crow.
The real question is how will they maintain the $34 against a sliding MSFT because it is also obvious that "shares" are still part of the package, unless....
I do not like what I'm hearing here. You must all be short YHOO.
MSFT offered $40 / share as a start last year when YHOO was trading around $27 / share ....why would YHOO accept anything less than $40 / share when it is currently trading at around $ 27 / share if its future outlook has not changed significantly?
...and so what if YHOO is down from its Nov. high of $34 / share, so are 90% of stocks out there
I do not like what I'm hearing here. You must all be short YHOO.
MSFT offered $40 / share as a start last year when YHOO was trading around $27 / share ....why would YHOO accept anything less than $40 / share when it is currently trading at around $ 27 / share if its future outlook has not changed significantly?
...and so what if YHOO is down from its Nov. high of $34 / share, so are 90% of stocks out there
I've got a tool for your personal and professional life.
It's called: when the site says "comment saved" it's not a joke.
Don't try to refresh the page.
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If in your personal and professional life, you handle dynamite or rattlesnakes, you are soon to be a dead man.
Once upon a time, when I was much younger, in the early days of 'websites' , I actually helped develop 'websites'...hey I needed the money. Obviously no testing done for this blog...comments posted even when 'characters validation fails' ... so now you know....
YHOO shorts are handling dynamite and rattlesnakes. I'm long YHOO.
I don't think they have a big budget.
I don't think they have a big budget.
Yep, it's still doin' it.
"Ballmer want's Yahoo to be a burgeoning part of Microsoft's empire, he doesn't want a shell. He wants Yahoo to innovate and maintain and grow their position. You can't do that if you grab it hostilely."
...
"However it goes down, the merger has to be friendly, otherwise most of what Microsoft is paying for will leave."
I think to the mid and lower level ranks at Yahoo, it doesn't matter whether the deal is hostile or not - that only matters to the upper levels of management.
Hostile or not, a deal with Microsoft means many higher managers at Yahoo will get the boot, or pushed out of the way. Each Yahoo employee is making an individual decision on whether that's good or bad.
If the Yahoo worker hates Microsoft, they don't care if upper management wants the deal or not - they'll bail anyways.
If the Yahoo worker thinks their upper management are bumbling morons, they'll accept a deal in any form, and hope that msft's new management is better. (cue The Who's "Won't Get Fooled Again").
MSFT will not walk because they know they cannot do 'organically' what buying Yahoo allows them to do.
Market values, etc.,etc.... do not apply here...you cannot compare Yahoo to anything else.
Someone with Ballmer's personality cannot use his standard approach here. Let him try...he knows as well as everyone that MSFT is going the way of horse carriages.....extinction...without a new business model.
Another msft shareholder who would just repeat the words of RC. What can you do? Nothing about this deal and nothing about how msft or yhoo have handled the negotiations and communications (to shareholders) makes any sense to me whatsoever. It's completely bizarre and, yes, very frustrating at times.
For those who say Msft has no option but to grow their business via a 100% acquisition of yhoo are blind, imo. There are other ways. I'm obviously no CEO but this deal seems rather easy to walk away from. It seems the only thing that's stopping either side from thinking rationally is one thing and one thing only:
EGO
I'm majorly long YHOO.
If yhoo responds with A then we do B
If yhoo responds with C then we do D
etc
If yhoo doesn't respond (and they didn't) then we do THIS!! And then we execute. Done. End of story. Move on.
This is just the most bizarre thing I've ever seen. And these people run multi-billion dollar companies?
You couldn't be more right, but then again, what has gone "by the book" with this clusterf*ck bid?
Both sides have acted like they are negotiating over a toy car in the playground.
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They did, Stephen.
Now, it's "Your move, Yahoo."
That was a calculated gamble that didn't pay off, it explains why they gave Yahoo 2 months to respond and engaged in hubris while they waited.
All along they had an unspoken "higher" figure written on a piece of paper. As I said before nobody ever puts their "final" price "first."
Yahoo on the other hand played it like a bunch of "emotional twats" they too gambled (and continue to do so, I might say) on intangibles and false hope. Everyone with any sense of reason could see that they really have no choice but to accept this marriage proposal.
$33, $34 or $35 are just semantics to Yahoo but a world of difference to arbitrageurs and hedgies that piled into the stock at the end of February and these guys will do everything but show up at your home with their 300lb cousin and a tire iron to get their magic price.
$34 gets that bride to the altar even if the cousins have to tie and carry her there.
Maybe there is a growing weakness in the display ad segment
Adding a no/negative growth entity to YHOO makes no sense, and dilutes what growth numbers YHOO is posting on its own.
The net result: Deal done at $34-35. Bank on it.
Expect MSFT to announce the acquisition very soon this morning.
Not that it really matters at this point but did they really play it by the book? I think the perception that msft left in people's mind was very damaging long-term. Here's a company who internally has been saying:
"We need to change our culture. No longer can we achieve success by leaving dead bodies in our wake."
I know because I was there and involved in these discussions. However, the only thing I've seen from msft is what we've always known about msft. You can't partner with them and if you don't do or agree with them then they'll be dead bodies in the path. IOW, the actions are NOT following the words and I think the stock is reflective of that fact. People are losing faith in this company because it refuses to change it's culture (as much as they say they want to change it).
If Msft is having a town meeting right now then my bet is that Ballmer is saying to his employees one thing and one thing only. It's time to move on without yhoo and here's why...
I certainly believe they did from a M&A point of view. Remember this is the largest such deal in the tech sector, it's an unsolicited takeover bid in a traditionally "hostile towards Microsoft" environment.
I really do not think they could have done anything different here. If Ballmer offered $50-billion right of the bat, Yahoo would have held their ground for 60 and Ballmer-Bashers would have been doubly vocal.
This is Yahoo believing they are worth $50 billion when everyone knows $40bb is a stretch and $45bb is a windfall.
I still believe that the deal happens at or very near $34/share but having said that I have decided to throw the towel in today, I'm liquidating my bet as we speak. I'm doing so because I also believe that Yahoo is like a drunken sailor dancing on the ledge of a high-rise building, sure they might land safely but I'll be damned to watch them fall.
Good luck to all you hold-outs out there because "luck" is the operative word now.
"Recent reports have suggested that the software company's rank-and-file are growing uneasy about Ballmer's pursuit of the struggling Internet giant."
That's a joke. They're not growing uneasy -- they've been uneasy about his pursuit of yhoo from day one. If it were up to the majority of the rank-and-file, this would have been dead a long time ago.
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