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Yahoo to Reject Microsoft Bid

Posted by Yaser on February 11, 2008

Yahoo’s board is planning to reject Microsoft’s $44.6 billion offer, arguing that it “massively undervalues” the company, according to a Wall Street Journal report. The board reportedly won’t consider an offer below $40 per share, which, as we understand it, was a number that was tossed out by Microsoft last year. The board also argues that the current offer doesn’t adequately reflect the risk that the deal could be overturned by regulators.

The board is reportedly planning on sending a letter on Monday, a little more than a week after Microsoft submitted an unsolicited bid of $31 per share, or $44.6 billion, for Yahoo.

Although the company has repeatedly asked for time to review its options, most analysts believe it will only be a matter of time — and money — before Yahoo succumbs to Microsoft’s offer.

Given the size of Microsoft’s bid, the likelihood of a higher offer from another bidder is minuscule and the list of potential suitors is very short. Still, Yahoo is rumored to be toying with the idea reorganizing the company and outsourcing its search-based advertising to Google in an effort to bolster revenue and remain a standalone company. Some industry watchers have also speculated that Yahoo could be trying to arrange an alternative deal with AOL.

Yahoo’s intentions could become clearer in another week (or by mid-February), when the company is expected to cut about 1,000 positions. Hypothetically, if it proceeds with the layoffs, that could indicate its seriousness at remaining independent, according to experts.

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