Yahoo! CEO continues to believe Microsoft offer not in shareholders' best interests

By Lisa Kerner

Charlotte, N.C., April 7 - Yahoo! Inc. chief executive officer Roy Bostock and chairman Jerry Yang reiterated that the company is not opposed to a transaction with Microsoft Corp. if it is in the best interests of Yahoo! stockholders.

Bostock and Yang were responding to a recent letter to Yahoo! from Microsoft CEO Steve Ballmer, who said Microsoft's "generous offer" was meant to create a "basis for a speedy and ultimately friendly transaction."

"Contrary to statements in your letter, stockholders representing a significant portion of our outstanding shares have indicated to us that your proposal substantially undervalues Yahoo!," Bostock and Yang said in their April 7 letter to Ballmer, which was included in a company news release.

"Furthermore, as a result of the decrease in your own stock price, the value of your proposal today is significantly lower than it was when you made your initial proposal," the letter said.

Microsoft proposed acquiring Yahoo! in a stock and cash deal valued at $44.6 billion, or $31 per share. The proposal was first announced on Feb. 1.

Yang said that in contrast to Microsoft's assertions about the effect of general economic conditions on Yahoo!'s business, Yahoo!'s forecasts are consistent with what was outlined in the company's last earnings call and Yahoo! has reaffirmed its first-quarter and full-year guidance.

According to Yahoo!, Ballmer has mischaracterized discussions between the two companies, implying that Yahoo! has refused to enter into negotiations.

"We understand that you have been meeting to consider and assess your alternatives, including alternative transactions with others in the industry, but we've seen no indication that you have authorized Yahoo! management to negotiate with Microsoft," Ballmer's letter said.

"This is despite the fact that our proposal is the only alternative put forward that offers your 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," Ballmer added.

"Our board carefully considered your unsolicited proposal, unanimously concluded that it was not in the best interests of Yahoo! and our stockholders, and rejected it publicly on Feb. 11," Bostock and Yang noted.

Yahoo!'s board of directors continues to explore strategic alternatives to maximize stockholder value, the company said.

"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 from our perspective which will be reflected in the terms of our proposal," Ballmer said in his letter.

It was previously reported on Feb. 14 that Yang highlighted the company's strengths following Yahoo!'s rejection of Microsoft's offer to acquire the company.

In a letter to Yahoo! stockholders, Yang said the company is "uniquely positioned" to capitalize on the global online advertising market, which is expected to grow to $75 billion in 2010 from $45 billion in 2007.

According to Yang, Yahoo!'s strengths include:

• Its global brand;

• Its cash balance of more than $2 billion at Dec. 31;

• Its attractiveness as a marketing partner; and

• Its substantial, unconsolidated investments in Japan and China.

On Feb. 11, Yahoo!'s board unanimously concluded that the Redmond, Wash., software company's unsolicited proposal is not in the best interests of Yahoo! and its stockholders, a prior news release stated.

Yahoo! provides internet services. The company is based in Sunnyvale, Calif.

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