Yahoo Snubs Microsoft
Shareholders may need to get hands dirty.
Microsoft's quick response to this weekend's news seems to indicate that it didn't expect its initial bid to be accepted in the first place.
The Financial Times reports that Microsoft has retained specialists and advisers to prepare for a proxy fight. Not to be outdone, Yahoo has also retained proxy advisers to defend its current board and lobby for shareholder support to hold out for a better offer.
While many believe Yahoo is simply carrying out standard big merger gamesmanship to solicit a higher price from its cash-rich suitor, others are looking for Yahoo to make a deal with either Google (GOOG) or Time Warner's (TWX) AOL division to remain independent. There's growing speculation that many Yahoo employees would leave or otherwise be unhappy with a Microsoft takeover, exacerbating what would already be a complicated integration process.
Steve Balmer, Microsoft's CEO, seems ready for a protracted takeover process. In his initial letter to Yahoo's board, he said, "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."
As BlackRock Inc., (BLK) -- a money manager and financial adviser retained by Microsoft -- said of the software giant, "Their ability to pay is not the gating issue. It's their willingness. They are going to be disciplined. They are not going to give away the farm."
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