Looks like Yahoo is trying their darnedest to avoid a Microsoft buyout. Now there is word that they are trying to work a deal with AOL.
What does this have to do with advertising and marketing? These are the current leaders in the Internet World and the survivors of the dot-com bust we had a few years ago. There are lessons to be learned as history unfolds before our eyes.
Here's the story from the Times of London:
Yahoo! is seeking to restart merger talks with AOL as a means of defending itself against the $45 billion (£23 billion) hostile bid approach from Microsoft, The Times has learnt.
It is understood that Yahoo! and its team of advisers from Goldman Sachs and Lehman Brothers, the US investment banks, have spent the past week evaluating possible tie-ups with media and technology firms that would save it from being swallowed by Microsoft.
It is also understood that one option being explored is to restart merger talks with AOL, the online business owned by Time Warner. Tie-ups with groups such as Google or Disney are also being considered. Although Yahoo! and AOL previously failed to join forces because of differences over price, it is hoped that the urgency created by an unwelcome approach from Microsoft and an impending economic downturn will spur the two into new talks. Google, which offered support to Yahoo! when the Microsoft approach was made public, also has a 5 per cent stake in AOL.
Jerry Yang, co-founder of Yahoo!, will today tell Wall Street that his board has rejected the software giant’s cash-and-shares proposal because it significantly undervalues the company. It is believed that the Yahoo! board will not even consider starting talks with Microsoft unless the suitor group offers at least $12 billion more, representing a share price value of more than $40. (READ MORE)
UPDATE: (Bloomberg) - Yahoo Inc., owner of the second-most-used Internet search engine, rejected a $44.6-billion takeover offer from Microsoft Corp. as too low, pressuring the world's largest software maker to raise its bid.
After a 10-day review, the board decided the $31-per-share offer "substantially undervalues" the company, Sunnyvale, Calif.-based Yahoo said today in a statement. Yahoo didn't say what price it would accept.
Yahoo co-founder Jerry Yang, who took over as chief executive officer in June after a 35-percent drop in the stock in 2006, said in an e-mail to employees today that investments and acquisitions will help attract more visitors to Yahoo's sites. Worldwide online advertising sales may double to $81.1 billion by 2011, according to Piper Jaffray & Co. Google Inc.'s sales rose almost seven times faster than Yahoo's last year.
In the three-paragraph statement, Yahoo said its ad technology, future prospects and investment portfolio mean the company is worth more. The decision was unanimous and the board is "continually evaluating" options to boost the stock's value, Yahoo said.
The rejection leaves Microsoft weighing whether to raise the price, give up, or take the offer straight to shareholders. A person familiar with the matter said last week that Microsoft may seek to oust Yahoo directors should they reject its offer.
Microsoft spokesman Bill Cox declined to comment.
Yahoo wants at least $40 a share, the Wall Street Journal reported over the weekend.
The offer is 62 percent more than Yahoo's stock price before the cash-and-stock bid. Microsoft shares have declined, lowering the value of the stock portion.
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