April 07, 2008, 9:40 AM — Microsoft Saturday threatened Yahoo's board of directors with a proxy battle
if it won't agree to a buy-out in the next three weeks.
Breaking nearly two months of silence since Yahoo's board rejected Microsoft's
US$44.6 billion bid, Microsoft's CEO Steve Ballmer sent an open letter Saturday
to Yahoo saying it is prepared to take its offer directly to shareholders.
In blunt and harsh language, Ballmer reiterated Microsoft's opinion that its
offer was "generous" and said the company had expected that a deal
would be struck swiftly. "Despite this, the pace of the last two months
has been anything but speedy," he wrote.
Ballmer also threatened to lower the price of Microsoft's offer if it is forced
to mount a proxy battle.
"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," he wrote.
Since it rejected Microsoft's offer Feb. 11, claiming it was too low, Yahoo
has been holding out for a better offer from another company or the opportunity
to strike up a partnership that would save it from agreeing to Microsoft's bid.
However, Yahoo has so far been unable to negotiate another deal.
Ballmer used this leverage in the letter, telling Yahoo that Microsoft's offer
is "the only alternative" to give its shareholders a fair return on
their investment and input into the future of the company.
"By any fair measure, the large premium we offered in January is even
more significant today," Ballmer said. "We believe that the majority
of your shareholders share this assessment, even after reviewing your public
disclosures relating to your future prospects."
He also accused Yahoo's executives of being unwilling to negotiate with Microsoft,
and said Yahoo's stalling is wasting valuable time the combined company could
be using to be more competitive in the Internet business.
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