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Yahoo 'to reject Microsoft offer'

Business Materials 11 February 2008 00:01 (UTC +04:00)

( BBC ) - Yahoo has reportedly decided to reject Microsoft's unsolicited takeover offer.

Several newspapers and news agencies say Yahoo's board will on Monday dismiss the $44.6bn (?22.9bn) offer as being inadequate.

When it was made, Microsoft's $31 a share offer was 62% above the level at which Yahoo's shares were trading.

Yahoo's shares closed on Friday at $29.20, which may suggest doubt that the offer will be successful or that a higher price will be offered.

A source quoted by the Wall Street Journal said that Yahoo's board would be unlikely to consider anything below $40 per share.

A $40 a share offer would be a 109% premium to the $19.18 closing price of Yahoo's shares the day before the original offer was announced.

Yahoo's shares have not traded above $40 for two years.

Although its shares have fallen sharply since then, Yahoo's websites remain among the world's most popular.

Yahoo's share price falls have come as it has struggled to compete with Google, which has also been a big competitor for Microsoft.

Microsoft's shares have fallen 12% since it made its offer, which may reflect concerns that it has already offered too much or that such a large deal would distract its management away from its core software business.

As a result of the falling share price, Microsoft's cash and share offer is now only worth $41.8bn.

Microsoft and Yahoo have both declined to comment on the reports.

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