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Yahoo Again Blocks Microsoft's Bid

Posted on: Thursday, 6 March 2008, 06:00 CST

By Jon Swartz

SAN FRANCISCO -- Yahoo has thrown up another obstacle in Microsoft's bid to buy it.

The Internet media giant extended a deadline for nominating candidates to its board of directors, buying it more time to find a white knight to help it stave off Microsoft's takeover bid, currently valued at $41.7 billion.

The announcement Wednesday comes as Yahoo steps up discussions with Time Warner about acquiring or forming a joint venture with its AOL division, a person briefed on the discussions said Wednesday, requesting anonymity because talks are ongoing.

A Yahoo-AOL combination would create a stronger advertising-driven business that could ultimately compete with Google. Yahoo also has been in discussions with media conglomerate News Corp., the person briefed on the discussions said.

The original March 14 deadline could have pitted Microsoft and Yahoo in a bloody proxy battle next week. Instead, Yahoo says, the deadline would fall 10 days after it announces the date for its annual shareholder meeting, which has yet to be scheduled.

Because Yahoo's shareholder meeting took place June 12, 2007, it is required to hold its 2008 meeting by July 12, based on Delaware law that lets companies wait up to 13 months between meetings.

Microsoft's original bid, then pegged at $44.6 billion, or $31 per share, was made public Feb. 1. Yahoo has rejected it as too low, and it was expected Microsoft would nominate its own slate to the Yahoo board to push the deal through.

In a statement filed with the Securities and Exchange Commission, Yahoo said the extension would allow its board "to continue to explore all of its strategic alternatives for maximizing value for stockholders without the distraction of a proxy contest."

The move is the latest in what is "shaping up to be a battle of epic proportions," says Anthony Sabino, a business-law professor at St. John's University: "Yahoo will use every tactic in the target company's playbook. It will delay shareholder meetings, seek injunctions of Microsoft, complain that a Microsoft takeover would be anti-competitive and (would) violate antitrust laws. And Microsoft will use every device known to hostile acquirers, who usually win."

Yahoo shares gained 2%, to $28.67, in trading Wednesday. Microsoft rose 1.9%, to $28.12. (c) Copyright 2008 USA TODAY, a division of Gannett Co. Inc.

Source: USA TODAY

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