Offer more and we’ll talk, Yahoo! tells Microsoft

Offer more and we’ll talk, Yahoo! tells Microsoft

Microsoft has dropped subtle hints that it may consider a hostile takeover bid for Yahoo!, but Yahoo! says that recent stock market developments mean that Microsoft's offer is worth less now than when it was originally presented two months ago.

Yahoo! rejected Microsoft's original offer of$31 per share (around $44.6bn), saying it undervalued the company.

The media had a field day. So did one of Google's SVPs, who posted a rather petulant blog on Google's website.

Microsoft's response to Yahoo!'s rejection was to expound the virtues of a Microsoft-Yahoo! tie-up, and make it quite clear that, now its wallet was open, it would pursue the purchase.

Yahoo! promptly made a string of announcements, including its$160m acquisition of Maven Networks, a strategic partnership with T-Mobile, and the launch of two new products – Yahoo! oneConnect and Yahoo! Mobile Widgets.

Microsoft still hasn't given up, and recently wrote a letter to Yahoo!'s board of directors saying that not only was its offer generous, but the company also claims that Yahoo!'s search and page view shares have declined during the past two months.

Yahoo! retaliated by saying that since Microsoft's own share price has dropped, the value of the original proposal is significantly lower today.

Microsoft delivered an ultimatum, saying that unless an agreement was concluded within the next three weeks, it would present an offer directly to Yahoo! shareholders, and such offer might be even lower than the first one.

Yahoo! said that Microsoft's threat to commence an unsolicited offer was counterproductive, and pointed out that while the company is still open to negotiations, it would not allow Microsoft or anyone else to acquire the company for anything less than its full value.

Click here to see the letter from Microsoft's CEO Steven Ballmer to Yahoo!'s board of directors, and here to see the response from Yahoo!'s chairman Roy Bostock and CEO Jerry Yang.

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