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Sources give inside look at MS’ raised offer
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newsbyte on 08 May, 2008 04:31:30
 
By MICHAEL LIEDTKE
San Francisco, May 8: Just how serious was Microsoft about raising its bid to
$47.5 billion for Yahoo Inc.?
The answer is taking on greater importance as more outraged Yahoo shareholders
threaten to sue the company’s board — or try to replace the 10 directors —
for the way they responded to Microsoft’s sweetened offer.
With shareholders up in arms, Yahoo has been trying to raise doubts about the
legitimacy of Microsoft’s last bid of $33 a share by pointing out that it
wasn’t submitted in writing.
Since the talks unravelled, The Associated Press contacted people familiar with
the deal to piece together how the final days of negotiations unfolded.
While they differed on some details, they agreed Microsoft didn’t spell out
the $47.5 billion offer in writing. Instead, it was orally presented by both Mr
Ballmer and Mr Brad Smith, the software maker’s general counsel.
Raising a takeover bid orally isn’t ideal, but it’s acceptable when two
sides like Microsoft and Yahoo already have been engaged a lengthy dialogue,
said Mr Morton Pierce, a New York lawyer. "You would always prefer to have (an
offer) in writing to see if there are any conditions attached, but it’s not
necessary when people have been negotiating in good faith," Mr Pierce said.
Microsoft and Yahoo executives had already held several rounds of meetings by
the time Mr Ballmer came to California on April 30 to meet Mr Yang in hopes of
settling on a mutually acceptable sale price.
A person familiar with the deal said Mr Yang told Mr Ballmer at the April 30
meeting that he thought Yahoo was worth $38 per share. Another person denied Mr
Yang threw out a specific figure.
But both agreed that Mr Ballmer told Mr Yang he could come up with "a couple of
more dollars." Microsoft’s board also met April 30 to consider raising the
bid.
On May 2, Mr Smith called Mr Ronald Olson, an outside lawyer for Yahoo, to make
it clear Microsoft would pay $33 per share and the offer could be presented to
Yahoo’s board.
The next day, Mr Yang and fellow Yahoo founder, Mr David Filo, flew on a
private jet to meet Mr Ballmer and Mr Kevin Johnson, Microsoft’s head of
online operations, at a Seattle airport.
Mr Ballmer reiterated Microsoft’s new offer of $33 per share. Mr Yang and Mr
Filo said they personally believed Yahoo was worth $38 per share but could go
along with the board’s desire for $37 per share. (AP)