Blogosphere: Microsoft’s ‘Dear Yahoo’ letter

The deadline is approaching. Yahoo Inc. has until next Saturday to respond to Microsoft Corp.’s April 5 letter threatening a hostile takeover, whereby the Redmond, Wash.-based software maker would approach Yahoo’s shareholders directly offering to buy their stock.

Since then, Yahoo has said the price Microsoft offered on Feb. 1 is not enough, and has agreed to provide Web advertising from Google Inc. And IT bloggers have been busy.

“This is about to get good,” Paul Miller wrote of Microsoft’s hostile acquisition attempt, in the Engadget posting “No more Mr. Nice Microsoft.” In its April 5 letter, Microsoft CEO Steve Ballmer claimed there have been “no meaningful negotiations” since Microsoft first offered to buy the company for about US$44 billion Feb. 1 and it was “the only alternative put forward that offers your shareholders full and fair value.” Ballmer also threatened to try to get Yahoo shareholders to vote in a new board of directors.

On the iBite blog, Ovi Lehti referred to Ballmer’s claim that a majority of Yahoo shareholders believe the bid — which would give them 62 per cent more money than they would have earned had they sold their shares immediately before the offer — is a fair value. Lehti adds, Yahoo has said a merger with Microsoft would “provide meaningful strategic value” and therefore “warrants a significant acquisition premium.” Lehti writes: “The only thing you can add is to that is…Bill Gates obviously thinks that he plays Monopoly and, the scary thing is, that he…wins.”

Wired blogger Betsy Schiffman warned Microsoft its shot across Yahoo’s bow may richochet back to Redmond. She writes: “A hostile proxy battle is the surest path to mutually assured destruction. Nothing good can come of it. It’s an expensive distraction that could result in a mass exodus and leave both companies worse off than they were before.”

Most responses to Schiffman’s post were laden with anti-Microsoft vitriol, though one jokingly impersonated Ballmer and claimed officials were secretly negotiating in the Motel 6 in Redmond.

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