Wednesday, March 5, 2008
Yahoo Extends Board Directors Nomination Deadline
New York (Reuters) - Yahoo Inc extended its deadline to nominate board directors, gaining time to seek alternatives or negotiate friendlier terms to a $41.7 billion buyout offer from Microsoft Corp. The original March 14 deadline could have catapulted Microsoft and Yahoo into a proxy contest next week. Instead, Yahoo said on Wednesday the deadline would fall 10 days after it announces the date for its annual shareholder meeting, which has yet to be scheduled. Yahoo Chief Executive Jerry Yang told employees in a letter that the extension would still allow Microsoft to nominate directors to its board, but the main aim was to create some breathing room.
Now you can draw any number of conclusions from this move, but what seems obvious is that Yahoo thinks it has realistic chances of an alternative deal, or deals, which just needs some more time. This move buys it anywhere between 3 to 5 months, since they have to hold their 2008 meeting sometime in July. At the very least, this takeover talk is going to be put on ice for the next two months. Which gives Yahoo time to consolidate their position and try to bargain from a position of strength. Maybe they could even roll out some new products and hope to turn around investor sentiment.
Another important question is how Microsoft is going to respond to this delaying tactic. Legally speaking, I'm not sure they can do much to speed up the process, but they do have the option of upping their offer and putting more pressure on the Yahoo board to cave in. But that seems unlikely at this stage. So you may not see much action directly from Microsoft, but there are 'interested' parties with a stake in Yahoo, who favor the takeover, and who can create a ruckus about the delay. Put another way, this could be the last roll of the dice for Jerry Yang, and if it does not work, I guess he would have no option but to smile and shake hands with Steve Ballmer.
In fact, I'll go so far as to say that Jerry Yang, in return for being allowed to insert this dealy, probably had to give some sort of assurance to the board that this would be the last attempt, and in case it doesn't pan out, he would not oppose the takeover after that. This also means that there likely won't be a proxy fight. Meaning that either Yahoo gets an alternative investor, or it voluntarily agrees to be bought by Microsoft. Either way, this is good news for Yahoo shareholders, since their stock won't be going back down to the pre-Microsoft-offer level.
Now you can draw any number of conclusions from this move, but what seems obvious is that Yahoo thinks it has realistic chances of an alternative deal, or deals, which just needs some more time. This move buys it anywhere between 3 to 5 months, since they have to hold their 2008 meeting sometime in July. At the very least, this takeover talk is going to be put on ice for the next two months. Which gives Yahoo time to consolidate their position and try to bargain from a position of strength. Maybe they could even roll out some new products and hope to turn around investor sentiment.
Another important question is how Microsoft is going to respond to this delaying tactic. Legally speaking, I'm not sure they can do much to speed up the process, but they do have the option of upping their offer and putting more pressure on the Yahoo board to cave in. But that seems unlikely at this stage. So you may not see much action directly from Microsoft, but there are 'interested' parties with a stake in Yahoo, who favor the takeover, and who can create a ruckus about the delay. Put another way, this could be the last roll of the dice for Jerry Yang, and if it does not work, I guess he would have no option but to smile and shake hands with Steve Ballmer.
In fact, I'll go so far as to say that Jerry Yang, in return for being allowed to insert this dealy, probably had to give some sort of assurance to the board that this would be the last attempt, and in case it doesn't pan out, he would not oppose the takeover after that. This also means that there likely won't be a proxy fight. Meaning that either Yahoo gets an alternative investor, or it voluntarily agrees to be bought by Microsoft. Either way, this is good news for Yahoo shareholders, since their stock won't be going back down to the pre-Microsoft-offer level.
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