Microsoft says its offer for Yahoo! is off the table, but could this be just a negotiating ploy? It?s a natural question to ask. I mean, if Microsoft has had the hots for Yahoo! for two years, can it really be so sure that it is no longer interested?
My take is that Microsoft has ruled out two options, but that one possibility for Yahoo! remains out there. Microsoft is not having luck getting Yahoo! to consider its price, so the direct option hasn?t worked. CEO Steve Ballmer says that Microsoft has also ruled out going directly to shareholders, a move that would likely require a nasty and time-consuming proxy fight. Yahoo! has proven itself adept at making itself a less attractive takeover target. In addition to the usual poison pill defenses, it has found other weapons like cutting sweetheart deals for employees and negotiating a partnership with Google, the very company Microsoft is looking to rival.
Such a move might not pass regulatory muster, but Ballmer indicated in his letter to Yahoo!?s Jerry Yang [hyperlink] that Yahoo!?s moves have succeeded in making the proxy battle sufficiently unattractive [hyperlink].
?Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft,? Ballmer wrote. ?We regard with particular concern your apparent planning to respond to a ?hostile? bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today.?
From my point of view, though, it doesn?t mean Microhoo is totally dead. Even though several doors seem closed, I see one door that could swing back open. Yahoo! shareholders may find it tough to swallow the fact that Yang said no to $33 a share and push him back to the negotiating table. There?s also the possibility that Yahoo! tries to go it alone for a little while, stumbles, and Microsoft comes back with a new offer.
Beyond Binary
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