Will Microsoft Go Hostile?
While the Microsoft / Yahoo! bid story seems to have been rolling for months it seems that we may actually be approaching the business end of the story. The Microsoft board met yesterday to agree their options and strategy for the future and while there was no announcement yesterday, many analysts on Wall Street are expecting news by the end of this week.
So what are the options? What will happen?
There are a number of options for both Microsoft and Yahoo! but it is Microsoft who has to decide their future strategy as soon as possible. The options are :-
Go Hostile
It is possible that Microsoft may decide to go hostile and take their bid straight to the shareholders of Yahoo! if the Yahoo! board decide not to recommend the offer. The current offer is $31 a share and while the management of Yahoo! are looking for between $35 and $37 per share, it seems unlikely that Microsoft will increase their offer to the higher end of the range.
Increase The Offer For A Board Recommendation
The most favourable course of action would be to agree a bid with the board of Yahoo! who would then be able to recommend this to shareholders as offering fair value for the group. This route would also allow Microsoft to retain as many of the Yahoo! directors as they wanted without any fallout from an aggressive bid.
Walk Away
While walking away is still an option for Microsoft, this seems highly unlikely now that they have shown their hand. If they were to walk away this would not only open the door to someone else taking over Yahoo!, but it would possible bring into question the future of certain parts of the Microsoft empire.
Even though there is still a long way to go in this fight it seems unlikely that either party will let the other walk away without agreeing an offer. In order to fight the mighty Google there is no real option other than a merged group.
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