Wednesday, 13 February 2008

Yahoo Rejects Microsoft

Yahoo has rejected Microsoft’s proposal to acquire it for 44.6 billion dollars. In a statement released to the media, the Internet behemoth said, “the Yahoo! Board of Directors has carefully reviewed Microsoft's unsolicited proposal with Yahoo’s management team...

Yahoo has rejected Microsoft’s proposal to acquire it for 44.6 billion dollars.

In a statement released to the media, the Internet behemoth said, “the Yahoo! Board of Directors has carefully reviewed Microsoft's unsolicited proposal with Yahoo’s management team and financial and legal advisors and has unanimously concluded that the proposal is not in the best interests of Yahoo! and our stockholders.”

Yahoo went on to say that Microsoft's proposal substantially undervalues its global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as its substantial unconsolidated investments.

In response, Microsoft issued a statement on its website, calling the rejection as “unfortunate” because a Microsoft-Yahoo! combination has potential to create a more effective company that would provide greater value and service to customers. The Redmond based computer colossus also said that it believes the combination will create a more competitive marketplace by establishing a compelling number two competitor for Internet search and online advertising.

Google currently has the lion’s share of the Internet search and online advertising market.

“The Yahoo! response does not change our belief in the strategic and financial merits of our proposal. As we have said previously, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!’s shareholders are provided with the opportunity to realize the value inherent in our proposal,” part of the statement read.

Microsoft also went on to say that a merger would have given Yahoo’s shareholders “superior value” and the opportunity to participate in the upside of the combined company and the proposed combination would have also offered an “increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market.”

This is the second time Yahoo has rejected Microsoft’s offer for a merger.