Matthew Karnitschnig at The Wall Street Journal is reporting that the Yahoo board of directors will formally reject Microsoft’s acquisition offer on Monday:
Yahoo Inc.’s board plans to reject Microsoft Corp.’s unsolicited $44.6 billion offer to acquire the Web giant, a person familiar with the situation says.
After a series of meetings over the past week, Yahoo’s board determined that the $31 per share offer “massively undervalues” Yahoo, the person said. It also doesn’t account for the risks Yahoo would be taking by entering into an agreement that might be overturned by regulators. The board plans to send a letter to Microsoft Monday, spelling out its position.
Yahoo’s board believes that Microsoft’s is trying to take advantage of the recent weakness in the company’s share price to “steal” the company. The decision to reject the offer signals that Yahoo’s board is digging in its heels for what could be a long takeover battle. The company is unlikely to consider any offer below $40 per share, the person said.
Peter Kafka suggests that this is merely an argument for more money with the obvious flaw that no one has stepped forward to value Yahoo at higher than $31 per share. In fact, the Microsoft offer isn’t worth $31 any more since its share price has sunk on investor unease with the merger. Theories abound on the next step, but Henry Blodget’s scenario looks as good as any.
Update February 11, 2008: Rumor confirmed – Yahoo! Board of Directors Says Microsoft’s Proposal Substantially Undervalues Yahoo!