...

Yahoo and Microsoft silent as deal deadline passes

Business Materials 28 April 2008 00:08 (UTC +04:00)

Microsoft's self-imposed deadline for its 44 billion-dollar takeover bid for Yahoo passed Saturday night with neither of the companies commenting on the expiration, dpa reported.

Yahoo has steadfastly rejected the offer since Microsoft unveiled it in February. Though the bid offered a 60 per cent premium on Yahoo's pre-bid share price, the web portal claimed that it undervalued the company as it embarked on an ambitious turnaround.

Since then Yahoo has determinedly sought other suitors to help it remain independent. However its attempts to forge an alliance with News Corp. floundered when Rupert Murdoch's company allied with Microsoft.

Yahoo's plans for more limited alliances with Google and AOL have failed to convince many stockholders that they will yield more advantages than Microsoft's bid.

The expiry of the deadline means that Microsoft will either walk away, sweeten the offer, or launch a hostile bid that would try to circumvent Yahoo's board of directors.

But with Yahoo unable to offer any compelling alternative to investors in the short term Microsoft is unlikely to increase its offer, most analysts believe.

"Microsoft's current bid is already a stretch, and I don't see any reason for them to really bid against themselves," analyst Sid Parakh said.

If Microsoft remains determined to do a deal it may be able to pick up Yahoo for less by waiting a few months. With Yahoo's latest earnings reports showing disappointing results the company's stock is liable to drop precipitously if Microsoft withdraws.

Microsoft has also assembled an alternative board it could try to have elected in a proxy battle but it is far from clear whether it has the votes to succeed.

"It's not clear if they would be successful," said Steve Weinstein, an analyst with Pacific Crest Securities. "It's a possibility, but not a certainty."

Latest

Latest