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24 February 2024

Microsoft urges Yahoo to accept 'generous' takeover offer

By Agencies


Yahoo remained coy on Monday as Microsoft publicly touted the virtues of its $44.6-billion bid to take over the Internet firm and Google maneuvered behind the scenes to thwart it.

"The Yahoo Board is undertaking a deliberate review process," the Sunnyvale, California, company said on its website.

"This will include evaluating all of the company's strategic alternatives -- including maintaining Yahoo as an independent company. A review process like this is fluid, and it can take quite a bit of time."

Yahoo is a "complex company" with promising stakes in search engine Alibaba in China and Yahoo Japan that would have to be valued into an acquisition price, according to financial analysts.

Yahoo boasts more than 500 million users worldwide and launched a new advertising platform last year.

Yahoo chief executive Jerry Yang said last week that the company is facing a "headwind" this year but that he expects it to start making more money in 2009.

Software giant Microsoft urged Yahoo to accept the offer it announced on Friday, adding it hopes to get a quick response from the major Internet player.

"We think it's a generous one," Microsoft chief executive Steve Ballmer said Monday at the US firm's annual conference with analysts in New York.

The offer represents a tempting 62 per cent premium on Yahoo's closing share price Thursday.

"We trust the Yahoo board and the Yahoo shareholders will join with us quickly in deciding to move down an integrated path," Ballmer said.

Google on Sunday condemned Microsoft's effort as an attack on the very independence of the Internet.

"Microsoft's hostile bid for Yahoo raises troubling questions," said David Drummond, Google's senior vice president for corporate development and chief legal officer.

"This is about more than simply a financial transaction, one company taking over another. It's about preserving the underlying principles of the Internet: openness and innovation."

By Monday, unconfirmed reports surfaced that Google's chief executive had called Yang to offer to help the company resist any hostile takeover campaign by Microsoft.

Yahoo would not confirm whether Google chief executive Eric Schmidt has contacted Yang.

Yahoo has received calls from "a number of interested parties" and has a wide range of strategic options, a source close to Yahoo told AFP.

Those options could include outsourcing online advertising to arch-rival Google, a proven master at pumping revenues from that well.

If it spurns Microsoft's offer, Yahoo's board of directors will be under pressure to give stockholders a soothing cash payout or even borrow money to buy back shares and turn the firm private.

Analysts at Briefing.com contend Yahoo executives believe Microsoft is undervaluing the firm and are considering revisiting failed alliance talks it had with California rival Google last year.

Yahoo remains tight-lipped, only going so far as to repeat that its board "is carefully and thoroughly evaluating the Microsoft proposal in the context of all of the company's strategic alternatives."

Talk of a potentially Internet-altering merger between Yahoo and Microsoft has ricocheted online since the world's leading software maker announced a bid for the Internet portal in a strategy aimed at competing with Google.

"We wanted this offer to be attractive to Yahoo shareholders," said Chris Liddell, Microsoft's chief financial officer.

The move comes as Yahoo is losing ground rapidly in the Internet space to Google, the search leader which has cashed in on the market for online advertising.

Yahoo announced plans last week to lay off 1,000 workers, seven per cent of its employees, as part of an effort to reallocate resources and bolster its bottom line. (AFP)