Monday, February 11, 2008

Yahoo rejects Microsoft takeover offer

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Yahoo has formally rejected Microsoft's $44.6 billion takeover bid to take on Google. Microsoft dangled a takeover offer that was 62 percent above Yahoo's stock price of just $19.18 when the bid was announced Feb. 1. Yahoo shares ended the past week at $29.20. Microsoft's stock price already has slid 12 percent since the company announced its Yahoo bid, reflecting concerns about the deal bogging down amid potential management distractions, sagging employee morale and other headaches that frequently arise when two big companies are combined.

Many analysts expect Microsoft to raise its offer by $5 billion to $12 billion to entice Yahoo to sell. Yahoo is believed to want a bid of at least $56 billion, or about $40 per share. Microsoft's first offer, which was made public February 1, was originally valued at $31 per share.

Google already has offered to help Yahoo avert a takeover and urged antitrust regulators to take a hard look at the proposed deal. Many analysts believe Microsoft is prepared to offer as much as $35 per share for Yahoo, which still boasts one of the Internet's largest audiences and most powerful advertising vehicles despite a prolonged slump that has hammered its stock. Yahoo now will be under intense pressure to lay out a strategy that will prevent its stock price from collapsing again.
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