The Sound of Silence
If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo board.”
–Microsoft CEO Steve Ballmer, April 5, 2008
Yahoo (YHOO) let Microsoft’s (MSFT) deadline for a response to its $40 billion-plus offer for the Sunnyvale, Calif., Internet company pass without a word Saturday. And according to people familiar with the situation, the companies haven’t traded words for several days.
So what now? Will Microsoft go hostile, take its case directly to Yahoo’s shareholders and drag the company kicking and screaming into acquisition talks? Will it raise its offer to bring Yahoo to the negotiating table? Or will it sheathe its still rattling saber and walk away, turning its attentions to other “organic and inorganic” strategies, leaving Yahoo to the mercy of a spiteful market undoubtedly livid over the company’s handling of an offer that initially put a 62% premium on Yahoo shares?
The first option’s an unpleasant one for all involved. A messy proxy fight. Employee attrition. Litigation, perhaps. The second option’s perhaps too humbling for Microsoft, which has said over and over again that its offer is a fair one. And the third? Well, you’d think at this point that it’d be pretty satisfying for Microsoft to withdraw its bid and send Yahoo’s shares spiraling off into the murky depths. Aha! Not so “undervalued” now, are we? Mm-hmm. And if Yahoo’s stock were to tank, Microsoft could conceivably double back with a second offer–perhaps even a slightly lower one–that might be a bit more warmly received than its original bid. There’s more than one way to an amicable transaction, yeah?