Well, after months of speculation it’s finally happened - Microsoft has made an offer for Yahoo!. From the official press release and the letter to the Yahoo! board enclosed in it, it’s clear that discussions have been going on since late 2006, but that in early 2007 the Yahoo! board shut Microsoft down since it believed it was better off going it alone with its new strategy.
In the end, of course, the company’s fortunes have worsened rather than improved, and so Microsoft is back with what can only be described as a seriously aggressive offer - both in terms of the 62% premium on Yahoo!’s share price and the tone of the letter. It lectures Yahoo!’s board on the woeful state the company is in, its dire prospects, and without naming Google explicitly, makes clear that the only way the two companies can make headway against it is by becoming a single company. The big question is whether Yang feels any differently from Semel (whose departure from the board yesterday now seems likely to have been in part a response to - or the removal of the final barrier to) this acquisition.
Perhaps this also explains Yang’s less aggressive than forecast moves on the job front this week - in anticipation of this deal (which no doubt was signalled in advance through informal channels by Microsoft), he may have decided he was better off keeping Yahoo! together until it was clear where its future lay. At a 62% premium it would be hard to argue that anything other than accepting the offer would be in the best interests of shareholders, who are unlikely to see that kind of growth in the share price anytime soon. Whether it’s in the best interests of customers, employees or the other assets the company has is another question entirely.
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