Microsoft Sets Deadline for Yahoo! to Make Deal

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Microsoft pressed Yahoo! with a three-week deadline to accept its $41 billion buyout bid. If a merger agreement was not completed until then, Microsoft would make its offer directly to Yahoo shareholders, probably at a lower price.

The warning was made by Microsoft’s chief executive, Steven A. Ballmer, in a letter sent by e-mail. It expressed dismay at Yahoo’s refusal to enter into formal negotiations over Microsoft’s Jan. 31 takeover bid and warned that without an agreement by April 26, Microsoft would seek to oust Yahoo’s board.

"If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo board," Ballmer wrote. “If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company from our perspective, which will be reflected in the terms of our proposal.”

In Yahoo!'s Board of Directors` Respond to Latest Microsoft Letter the company stated that it does not oppose the deal with Microsoft but the software giant has undervalued Yahoo!.

"Our Board's view of your proposal has not changed. We continue to believe that your proposal is not in the best interests of Yahoo! and our stockholders. Contrary to statements in your letter, stockholders representing a significant portion of our outstanding shares have indicated to us that your proposal substantially undervalues Yahoo!," wrote Roy Bostock, Chairman of the Board, and Jerry Yang, CEO.

Yet, Yahoo! promised to revolutionize online ads if it can avoid Microsoft takeover with AMP!, a new advertising management platform designed to dramatically simplify the process of buying and selling ads online. The upgrade won't be available until this summer, and then only on a limited basis among more than 600 newspaper publishers trying recover some of the revenue that the Internet has siphoned from their print editions. Yahoo stated Amp! will make it easier for advertisers to aim their messages at specific demographic groups across scores of Web sites. Amp! will rely heavily on data that Yahoo! collects about people's preferences at its own Web site as well as other online destinations.

In conclusion Yahoo! asked to restate their position, so there can be no confusion: "We are open to all alternatives that maximize stockholder value. To be clear, this includes a transaction with Microsoft if it represents a price that fully recognizes the value of Yahoo! on a standalone basis and to Microsoft, is superior to our other alternatives, and provides certainty of value and certainty of closing. Lastly, we are steadfast in our commitment to choosing a path that maximizes stockholder value and we will not allow you or anyone else to acquire the company for anything less than its full value."

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