Did Microsoft (MSFT) really walk away from the Yahoo (YHOO) deal? Or was the weekend’s behaviour just yet another negotiating tactic? Or, more importantly, if it wasn’t intended to be a negotiating tactic, will it become one, as Yahoo’s shareholder rebellion grows?
Despite Yahoo’s suggestion to the contrary, we have yet to hear from a single Yahoo shareholder who publicly supports Yahoo’s board’s decision to hold fast at $37. Legg Mason’s Bill Miller, once Yahoo’s biggest supporter in the quest for a higher bid, seems dismayed. Employees seem dismayed. The market seems dismayed.
And no wonder: Yahoo has made every point it can in its insistence that $31 “substantially undervalues” the company, and despite all of this–including the much-ballyhooed Google search partnership–and the market still says Yahoo is worth all of $22.
It doesn’t seem inconceivable that, over the next few days, Yahoo shareholders will effectively insist that negotiations be re-opened–in which case, Microsoft will have “gone hostile” without going hostile, just by walking away. And if negotiations are reopened as a result of shareholder unrest, of course, the advantage will have shifted overwhelmingly to Microsoft.
See Also: Yahoo: Out of Touch