Microsoft has fired another warning shot over the bows of its target acquisition, Yahoo, stating that an “agreement between Yahoo! and Google would consolidate over 90% of the search advertising market in Google’s hands”.
Brad Smith, Microsoft’s general counsel, says in a statement: “This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo! We will assess closely all of our options.
“Our proposal remains the only alternative put forward that offers Yahoo! shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers.”
The statement follows Microsoft’s letter to Yahoo! board members, indicating the potential for a hostile takeover.
In that communication last week, Steve Ballmer, Microsoft CEO, complained about Yahoo!’s apparent inactivity, pointing out that, during the two months since its offer at a 62% premium over the closing price on January 31, “the Internet has continued to march on, while the public equity markets and overall economic conditions have weakened considerably.
“At the same time, public indicators suggest that Yahoo!’s search and page view shares have declined. Finally, you have adopted new plans at the company that have made any change of control more costly.”
Ballmer’s letter then makes it clear that, in light of developments, the original offer is generous by any measure, and suggests that now is the time to negotiate a definitive agreement around the acquisition.
And the final warning: “If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo! board… If we are forced to take an offer directly to your shareholders, that action will have an undesirable impact on the value of your company … which will be reflected in the terms of our proposal.”
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