Yahoo has rejected Microsoft Corp.’s $44.6 billion dollar offer thinking that they can get a better offer from the company or find another way to pay its shareholders. Yahoo has said that they could possibly negotiate if Microsoft comes up with a better offer. If they don’t, then Yahoo will have to try to rebound financially on its own.
Some analysts think that Microsoft will raise its offer to $35 to $40 per share to make the negotiation. Microsoft was willing to pay at least $40 per share for Yahoo a year ago but Yahoo wasn’t interested in the offer because it was confident in its own strategy and plans. A higher bid could possibly hurt Microsoft’s stock price, because recently it has been falling. Microsoft’s market value has decreased by over $40 billion, which is 14 percent, since the bid was announced. The Yahoo takeover could be more trouble than it’s worth for Microsoft. Analysts say that Yahoo will have no choice but to take the offer if Microsoft raises its bid.
If Microsoft doesn’t want to pay more money then they can take their original bid directly to Yahoo’s shareholders. Microsoft has been seriously considering this by meeting with some of Yahoo’s major shareholders to get support for the offer. Yahoo could also make Microsoft not want them by issuing out more company shares so that it would make the company too expensive for Microsoft to want to buy.
Even though Yahoo has been suffering for the past two years, it still has one of the largest Internet audiences and is a very valuable franchise. Microsoft wants to use those qualities to compete against Google Inc., which currently has the lead in online search and advertising. Yahoo has been considering an advertising partnership with Google as an option to earn profits and stay independent. Yahoo is also looking for other companies that might make a larger bid than Microsoft, but none has come forward yet.
Yahoo is hoping that their stock value will not go below $20 per share if Microsoft decides not to make any more bids. If that happens then there could be a large number of shareholder lawsuits.
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