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Yahoo! Sued for Rejecting Microsoft Takeover Attempt
Marcia




msg:3582543
 12:16 am on Feb 23, 2008 (gmt 0)

Two Detroit pension funds sued Yahoo Inc and its board on Friday for rejecting Microsoft Corp's unsolicited $41.2 billion offer in a sign of growing shareholder frustration with the online search and media company.

Detroit funds sue Yahoo over Microsoft rebuff [news.yahoo.com]

This is the kicker:

The funds also feared the board was scheming to prevent a hostile takeover by Microsoft by entering into inferior deals with either News Corp or AOL that would not have to be approved by shareholders, the lawsuit said.

So they're trying to tie Yahoo's hands, essentially trying to prevent them from making any effort to thwart a hostile takeover. So much for providing a "quality user experience," which apparently isn't part of stockholders' long term mentality.

 

ByronM




msg:3583864
 1:09 pm on Feb 25, 2008 (gmt 0)

Been following this in other forums and i sort of agree with this. If I'm not mistaken Yahoo's board rejected the offer without allowing shareholders (stakeholders) to vote on the offer thus Yahoo acted as a private company vs the public company it is. Yahoo took it upon itself to say its value over and beyond the value perceived by the shareholders that may have seen the light beyond the tunnel considering yahoo's lack of growth and current business outlook.

I'm not sure if a Yahoosoft is the best solution owning shares in Yahoo it would be a nice deal for me to see the merger/buyout happen. I can hardly see anyone else with the cash making a rosier deal unless Google is intent on stepping in but a GooHoo deal doesn't seem like the right smashup technology wise nor product wise.

BTW, whats with all the MS hate here lately? Why would a goohoo deal or a merger with Fox/newscorp be any better?

Yahoo is a public company and as a public company they tied THEMSELVES to the will of the share holders and by rejecting a good offer without consulting the shareholders Yahoo chose to hold themselves down.

Why blame MS for lack of planning on behalf of Yahoo?

[edited by: ByronM at 1:12 pm (utc) on Feb. 25, 2008]

bakedjake




msg:3583875
 1:35 pm on Feb 25, 2008 (gmt 0)

So they're trying to tie Yahoo's hands, essentially trying to prevent them from making any effort to thwart a hostile takeover.

Well, they are the owners of the company. If I was a Yahoo shareholder, I'd be pissed too.

BTW - the bid wasn't hostile, it was unsolicited. There's quite a bit of difference there. The word "hostile" came only from Google.

weeks




msg:3583911
 2:18 pm on Feb 25, 2008 (gmt 0)

Gee, what a surprise.

Huntster




msg:3583933
 2:40 pm on Feb 25, 2008 (gmt 0)

Yahoo is a shoddy company. Their shareholders will wish they let this happen 3 years from now.

walkman




msg:3583952
 2:53 pm on Feb 25, 2008 (gmt 0)

and so it begins. The board has a duty to do what's best for shareholders so they have no choice. MSFT will get this IMO. Y!'s ego cannot nullify the interest that shareholders have and there are some $45 billion on the table.

mikedee




msg:3583964
 3:04 pm on Feb 25, 2008 (gmt 0)

Suing someone is one thing - actually proving you are right is another matter.

I think the Yahoo directors are doing what is best for the company and the shareholders for the long term.

The shareholder return is not measured over a certain time so the Directors will always be looking for long-term returns. Microsofts share price dropped as soon as they announced the offer to buy, maybe their shareholders should be suing?

ByronM




msg:3583982
 3:20 pm on Feb 25, 2008 (gmt 0)

Suing someone is one thing - actually proving you are right is another matter.

Actually the burden of Proof is on Yahoo's hands now. Yahoo has to PROVE they're worth more than the generous MS offer and now they not only have to prove this to the courts but the very stock holders that they refused the offer on behalf of without consulting.

On a side note, MS released a press release stating the memo that went out to its group showing how the company will have changes when it incorporates 10,000 new employees, products and services.

I think Yahoo was hoping for another counter offer but failing to give due diligence to its very own stake holders.

[edited by: ByronM at 3:21 pm (utc) on Feb. 25, 2008]

ronin




msg:3584042
 4:54 pm on Feb 25, 2008 (gmt 0)

If the pension fund managers have no confidence in the Yahoo! board, why not just sell their shares and get out of Yahoo!? Is it because... they're really, really greedy, short-termist and stupid?

nomis5




msg:3584112
 6:28 pm on Feb 25, 2008 (gmt 0)

I agree with the thought that the Yahoo directors are looking long term. A few months pause for thought and maybe a higher bid will come along. If not MS will still be there.

But there is no limit to the greed of shareholders, and their short sightedness. They will trample over anything and anyone in their way to earn a quick buck. This shortsighted legal action proves their greed. If the Yahoo directors decide to fight it, who's money will they be using? The shareholders of course.

incrediBILL




msg:3584114
 6:31 pm on Feb 25, 2008 (gmt 0)

What I take away from this is there are a couple of pension funds in trouble trying to make Yahoo be the scapegoat and deflect the issue away from their sorry state of affairs.

Say whatever you want about Yahoo, but I'd rather own Yahoo stock than have my money tied up in most pension funds these days! ;)

Commerce




msg:3584121
 6:46 pm on Feb 25, 2008 (gmt 0)

Interesting thread. I agree that a board has a duty to make decisions that are in the interests of its shareholders. That said, I think there are also times where the right thing to do is to ask the investors (shareholders) what to do.

In the case of a serious buyout offer representing around twice the market value for shares, it seems to me that such a decision should go to the shareholders. I guess that thinking may be right, because at least some of the shareholders apparently agree with that logic.

It is because of this that I entirely disagree with ronin's post. If the pension fund managers have no confidence in the Yahoo! board, why not be able to vote to sell their shares at double their market value rather than having to take half the revenues from a market sale? If they lose their vote to approve the takeover offer, then they can chose to sell at market at that time.

As fund managers, those folks also have a duty to their fund investors. If I found out that my fund manager did not attempt to get twice the amount for shares that they could have, I might be just a tad bitter toward them and not Yahoo!

Whatever the case, one hopes everyone directly involved has their D&O insurance paid up. ;-)

Oh what a tangled web we weave...

-Commerce

rogerd




msg:3584208
 8:38 pm on Feb 25, 2008 (gmt 0)

Entrenched management almost always fights takeovers on the basis that the shares are currently undervalued and that shareholders will do better in the long run if the firm stays independent.

Takeovers DO take place more often when a company's stock is depressed... but usually the share price is down because the market (as a whole) isn't optimistic about the prospects for the company.

Sometimes, management is right. Most often, though, it's a knee-jerk reaction to the prospect of having their jobs put in play. Oddly, the managers often find the acquisition becomes a lot more fair after their own compensation details have been negotiated.

>>If the pension fund managers have no confidence in the Yahoo! board, why not just sell their shares and get out of Yahoo!?

That's what they are trying to do, but they'd like to sell the shares to Microsoft for a nice premium instead of dumping them at the pre-offer share price. Pension fund managers are there to make as much money as possible for their investors. A 50% return in a few months may be a lot more attractive than the possibility of a 100% return over, say, 3 to 6 years. They'd lock in a nice gain (or cover some losses, depending on when they bought YHOO), and have the funds to invest in opportunities they find more timely and attractive.

honestman




msg:3584327
 10:09 pm on Feb 25, 2008 (gmt 0)

Wow. It used to be that computer types were anti-establishment, and now I see them defending the establishment with fervor. Microsoft clearly has no clue on how to

1) create a decent search engine
2) create a portal which is not pure rubbish
3) create anything of use at all in terms of content on the Web despite billions of dollars.

With all its flaws, Yahoo is vastly superior to Microsoft as a Portal, and would be far better served with alliance with Google - a company which actually understands the Web and its users.

Live.com is more like Dead.com, and that is what MSFT would do to Yahoo.

gibbergibber




msg:3584803
 9:32 am on Feb 26, 2008 (gmt 0)

This isn't about whether a Yahoo/MS deal is a good idea, this is about whether Yahoo acted correctly in failing to consult its shareholders about MS's offer.

Yahoo isn't a private company, they're owned by their shareholders, so it's ultimately up to the shareholders to decide whether this offer is a good idea. If it comes to it, Yahoo's shareholders could vote to sack Yahoo's current management and appoint a new management which is willing to accept MS's offer.

This isn't about greed either, fund managers don't own these shares themselves, they're managing them on behalf of others. As a couple of people noted above, fund managers are legally obligated to try and get as much value from their shares as possible. If a fund manager deviates from that cause, they could be sued themselves.

Lexur




msg:3584854
 11:17 am on Feb 26, 2008 (gmt 0)

And why those shareholders do not remove the managers and accept the Microsoft's money for themselves?
Why they do not sell directly the shares to Microsoft?

Are they not really the owners of the company? Are they just a few of them?

Marcia




msg:3584876
 11:57 am on Feb 26, 2008 (gmt 0)

Wow. It used to be that computer types were anti-establishment, and now I see them defending the establishment with fervor.

And that - establishment - is one of the core problems at Yahoo. Too much Establishment: too much board room, too much "Harvard School of Business", not enough Berkeley. Yahoo seems to have gotten "old" and establishment. Microsoft isn't much different. And definitely not enough "Cluetrain" for either one of them.

Google is "young" and in spite of their shareholder and corporate standing, they've managed to stay young and have maintained their vibrancy. When bright minds leave Google, they don't leave to join the Civil Service; they go over to start-ups where the environment is young, vital and challenging.

As far as pension funds are concerned, go back in history on a few of them. Where were these pension fund managers all along, in managing the funds, if they didn't like how Yahoo was doing? Why wait until this point in time?

Sorry for being so "New York City," but something just doesn't smell right about the timing of this.

[edited by: Marcia at 12:24 pm (utc) on Feb. 26, 2008]

WiseWebDude




msg:3585111
 4:13 pm on Feb 26, 2008 (gmt 0)

ONLY thing I like about Yahoo! is their messenger and their finance section. Other than that, like Huntster said, they are crap anymore. Now they are talking about adding more junk into their search, ROFL. Sheesh, so now you STILL can't find what you want, but will just see more crap all pumped in it...they are darn ridiculous...it is PATHETIC to watch! I feel sorry for them if they don't realize what they look like these days.

greenfrog




msg:3585365
 7:51 pm on Feb 26, 2008 (gmt 0)

I think that board's typically deny initial offers to protect shareholder wealth. And if Microsoft is really a worthy bidder, then they'll come with a higher bid, if they really want them.

It also gives other potential bidders opportunity to come out of the woodwork and make alternative offers, like Google did. But as NO other people have come forward with money on the table, this offer will probably come to fruition, as Yahoo has no other choice. Yahoo's P/E is currently 60.49, which is essentially double of Google.

The only option that Yahoo has, barring another bidder, is to watch their stock slide back to where it should be, about $18 per share

It is what it is...

greenfrog




msg:3585376
 7:59 pm on Feb 26, 2008 (gmt 0)

Also, it wasn't publicized but Microsoft Offered $40 per share for Yahoo about 1 year ago.

So, Yahoo's board knows that MSFT is willing to pay..so I think that the board is playing it right and trying to get the most money for shareholders...Negotiating 101.

[latimes.com ]

fabricator




msg:3586929
 11:07 am on Feb 28, 2008 (gmt 0)

If the pension funds wanted cash from Microsoft, they should have *bought Microsoft shares* instead.

I'm really fed up with the IT industry and is formation of larger and larger monopolies in key sectors. So much good tech and competition getting buried after takeovers. I'd be pissed if I bought shares in one company I had faith in the long term return of, only to have it brought out by its greedier rival.

ronin




msg:3586990
 12:28 pm on Feb 28, 2008 (gmt 0)

Here here. I don't get why selling out (giving up?) is seen by many as some sort of victory. To me (I understand very little of business, I confess) it looks like the most ignoble course of action in any situation.

I hope Y! tells MS where to go and the Y! board tells the company shareholders to respect its boldness in deciding to stand its ground or else give up on Y! and go buy a lightweight company more likely to cave in under pressure and sell itself to a monopolistic, anti-competitive behemoth.

incrediBILL




msg:3587476
 8:57 pm on Feb 28, 2008 (gmt 0)

Selling out isn't giving up unless you're going broke and Yahoo! is far from going broke.

Often, selling out is cashing out after working for many years on a project, you take the money and go off and start a new project, cash out and do it again. Sometimes you IPO to cash out and if the stock gets stagnant after the IPO, like Yahoo!'s has done, you can sell the whole mess to cash out yet again.

That's how Silicon Valley billionaires and a whole bunch of millionaires are made.

Sadly, it may sound like a lot, but having a million out here in SV isn't much these days when a house can easily cost that much.

CainIV




msg:3587635
 12:30 am on Feb 29, 2008 (gmt 0)

Ridiculous. And the rich get richer....

incrediBILL




msg:3587646
 12:41 am on Feb 29, 2008 (gmt 0)

Ridiculous. And the rich get richer....

It's not ridiculous, it's business :)

mcavic




msg:3591361
 10:46 pm on Mar 4, 2008 (gmt 0)

What I take away from this is there are a couple of pension funds in trouble trying to make Yahoo be the scapegoat and deflect the issue away from their sorry state of affairs.

Absolutely. Yahoo is the same company today that it was three years ago. Anyone who doesn't like them shouldn't have bought their stock, and nobody should have been counting on them being bought out.

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