[Posted on March 5, 2008 - 5:32 PM]
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DiggLike a child who doesn't want to go to sleep, Yahoo! Inc. [YHOO] is using all the tricks in the book to stave off climbing into bed with Microsoft Corp. [MSFT]
The company's latest tactic suggests it won't lie down quietly. Yahoo! on Wednesday said it would extend the deadline for nominating directors to its board from March 14 to 10 days following the public announcement of its annual meeting date. Yahoo! held its 2007 annual meeting on June 12, and Delaware law requires companies to hold annual meetings no more than 13 months from the date of the last meeting.
In a press release announcing the change, Yahoo! said the move gives stockholders who wanted to nominate board candidates more time to do so and allows its board to continue exploring strategic alternatives without the distraction of a proxy fight while simultaneously hampering Microsoft's ability to build any momentum for a board takeover.
"My feeling is that they're still posturing for a higher price," said Tom Taulli, founder of DealProfiles.com, an online service that tracks mergers and acquisitions. "They're using smoke and mirrors, but once they get to the convention, they're not going to have enough delegates."
That posturing also includes chatter that the company is still attempting to negotiate an alternative to Microsoft's $31 a share, $42 billion offer. A report in the New York Times Wednesday indicated Yahoo! was in talks about a joint venture or perhaps a merger with Time Warner Inc.-owned AOL. The report provides few details on what kind of deal the two companies would reach, though it is one of a number that have been floated since Microsoft unveiled its buyout proposal Jan. 31.
Jeffrey Lindsey, an analyst with Sanford C. Bernstein, said the latest move by Yahoo! suggests the company is taking a more aggressive approach to finding alternatives to the Microsoft offer. "What is becoming clear, far more than we thought, is that Yahoo! is prepared to put up a fight," he said. "It doesn't appear to be posturing at this point, because they're doing things like delaying the shareholder meeting. These are much more drastic actions characteristic of someone that's fighting the bid, not negotiating."
For its part, Microsoft continues to show it is serious about completing a deal. The software maker has enlisted Bear Stearns Co.'s Alan Schwartz to advise it on the deal, according to The Wall Street Journal. Microsoft already has a cadre of veteran bankers working on the deal, but Schwartz is known as one of the sharpest minds on Wall Street, a reputation earned chiefly through his work as as an adviser to media companies.
Yahoo!'s ongoing delays and posturing also may be giving the company time to negotiate a more amicable agreement with Redmond, Wash.-based Microsoft. There have been various media reports about active talks between the two companies, though neither has confirmed these discussions.
Ashkan Karbasfrooshan, a Yahoo! shareholder and president of technology industry blog WatchMojo.com, said it appears Yahoo! wants to cover all its bases to deal with any lawsuits filed against it by shareholders.
Karbasfrooshan said that in the event Yahoo! does end up agreeing to a deal with Microsoft, it must show it evaluated all alternatives to ensure it received the highest price. Likewise, it must be prepared to prove why any alternative to the Microsoft deal are in the best interests of shareholders.
"Ultimately, investors want simple, transparent transactions," Karbasfrooshan said. - David Shabelman
