Too Much Trouble?
Ultimately, it seems that Microsoft's management, fatigued by Yahoo's resistance and demands, decided that engaging in a proxy fight to oust Yahoo's directors would be an arduous and nasty process. After all, for Microsoft, the goal of the massive acquisition was to quickly become a mightier competitor to Google in online advertising.
"This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo undesirable as an acquisition for Microsoft," Ballmer wrote in a letter he sent Saturday to Yang.
As soon as Microsoft announced its bid for Yahoo on Feb. 1 -- valued at US$44.6 billion at the time -- Yahoo's management began seeking and considering alternatives, while its stock began to rise from the latest pre-bid price of $19.18.
By the time Yahoo's board formally rejected the unsolicited offer on Feb. 11, saying it undervalued the company, Yahoo's stock price had risen to $29.87, erasing the offer's premium. The next day, Microsoft hinted in a letter to Yahoo that it wouldn't shy away from attempting a hostile takeover.
Meanwhile, several media reports appeared -- all attributed to anonymous sources -- that Yang was holding conversations with Google, AOL, Disney and News Corp., exploring alternative deals that would strengthen Yahoo's business and thus relieve the pressure to accept Microsoft's offer.
On April 5, Microsoft, clearly impatient, threatened Yahoo's board of directors with a proxy battle if it wouldn't agree to a buy-out in the next three weeks. That deadline passed last Saturday.