Yahoo! Turns Down Microsoft Takeover Bid

Yahoo! has turned down Microsoft’s $45 billion (£23 billion) takeover bid, saying that it substantially undervalues the company.

However, a deal could still go ahead if Microsoft returns with an improved offer.

In a statement released this afternoon, Yahoo! said: “After careful evaluation, the board believes that Microsoft’s proposal substantially undervalues Yahoo! including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments.

“The board of directors is continually evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximize value for all stockholders.”

The bid would have seen Microsoft pay $31 in cash and shares, valuing Yahoo! at just under $45 billion (see Microsoft Offers To Buy Yahoo! For $44.6bn).

A report in today’s Times said that Yahoo! would only consider an offer of at least $12 billion more.

The Times quotes a source close to Yahoo! as saying: “All they [Microsoft] are trying to do is pick off the company on the cheap. They’re trying to steal it. And the board is not going to let that happen. They have gone for a valuation that reflects the five-year low of the stock.”

The source added: “It would have to be in the 40s to start talking, and we would have to get over regulatory issues. It would have to be an offer that would give Jerry Yang something to stand on a podium and smile about.”

It has also been reported that Yahoo! is exploring tie-ups with companies such as Google or AOL as a way of avoiding a Microsoft takeover (see Yahoo! Could Restart Merger Talks With AOL).

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