Microsoft Corp.’s directors are meeting Wednesday to consider raising the software maker’s $41.9 billion bid for Yahoo Inc. instead of pursuing a threatened hostile takeover attempt, according to a published report.
A decision could emerge after the meeting, The Wall Street Journal reported, citing unnamed people familiar with the matter.
Microsoft also is weighing withdrawing its bid — a move likely to cause a precipitous drop in Yahoo’s stock, which has been bolstered by the 3-month-old takeover bid.
(Msnbc.com is a joint venture of Microsoft and NBC Universal.)
If Yahoo’s stock deteriorated during the next few months, Microsoft could return with another bid that would be more difficult to turn down.
Investors have been eagerly awaiting word of Microsoft’s next move since Yahoo let pass an April 26 deadline for accepting the offer.
Microsoft Chief Executive Steve Ballmer had threatened to oust Yahoo’s 10-member board — including Yahoo CEO Jerry Yang — if it didn’t relent and agree to a sale.
Yahoo’s board maintains the Sunnyvale-based company is worth substantially more than Microsoft’s initial bid of $44.6 billion, or $31 per share. The value of cash-and-stock offer had declined to $29.06 per share Wednesday, reflecting a downturn in Microsoft shares since the saga began.
Contradicting Ballmer’s recent public statements, Microsoft privately has indicated it might be willing to boost its offer to $32 or $33 per share, the Journal reported Wednesday.
That price still might not be enough to wrap up a friendly deal because some of Yahoo’s major shareholders have signaled they want at least $35 per share, or about $50 billion.
Ballmer and Bear Stearns CEO Alan Schwartz, a Microsoft adviser, have been lobbying Yahoo shareholders to rally support for a lower price, the Journal said.
Ballmer is vacillating between a higher offer and withdrawing the bid, and his recommendation is likely to sway Microsoft’s board, the Journal reported.
Yahoo’s directors haven’t specified an acceptable sales price, but some analysts believe they may want close to $40 per share — a price that Microsoft indicated it was willing to pay when the two sides held private discussions in early 2007.
But Yahoo’s earnings have sagged since then as the company lost ground to rival Google Inc. as they compete for Internet advertising sales.
Yahoo still holds two trump cards that could thwart a Microsoft takeover.
It has tested a potential advertising partnership with Google that could lead to a long-term alliance if it can win regulatory approval. And it has explored merging with the online operations of Time Warner Inc.’s AOL.