Microsoft CEO Mentions Strategies for Yahoo Acquisition to Employees

Microsoft CEO Steve A. Ballmer informed employees Thursday about the company’s decision to announce, in ‘short order’, the path it would follow in its move to acquire Yahoo.

Making the announcement, Mr. Ballmer said currently there were three options open to Microsoft regarding its acquisition of Yahoo. It could either look at finalizing a negotiated business deal, going for a hostile takeover of the company, or just walking away from the whole acquisition exercise.

On Thursday’s meeting with his employees, Mr. Ballmer had also said he was clear about how much he was willing to spend on the Yahoo acquisition. In that meeting he had said, “We’re willing to pay for that at some level and beyond that level we’re not willing to pay for it. I know exactly what I think Yahoo is worth to me. I won’t go a dime above and I will go to what I think it is worth if that gets the deal done.”

Microsoft’s move to acquire Yahoo is at a stalemate currently, with Yahoo turning down the cash-and-stock offer that Microsoft had put up initially. That offer was initially valued at $31 per Yahoo share, though as of now it is worth lesser, at approximately $29.48 per share.

Yahoo had turned down Microsoft’s initial offer because it felt the deal did not do justice to Yahoo’s value as a company. Jerry Yang, Yahoo’s CEO, has however said his company was open to the deal if Microsoft was willing to raise the price per share being offered.

People in the know about the whole deal said Mr. Ballmer was at the moment looking to garner support from shareholders of Yahoo by raising the share value to about $33 a share. However, Yahoo’s management and board, along with some of the company’s shareholders, were looking for a higher valuation, the sources said.

The pressure is now on Mr. Ballmer and Microsoft, primarily because an initial deadline they had set for the Yahoo acquisition had expired five days back. On another front, Mr. Ballmer had earlier talked of starting a proxy battle to eject Yahoo’s directors from its board if the deal could not be completed within the stipulated deadline.

A source with information about the thought processes at the Microsoft end of the deal said Microsoft’s decision to defer the announcement of further steps about the deal, while simultaneously offering the possibility of a higher offer, was aimed primarily at giving time to Yahoo to reconsider the stand it has taken so far, of rejecting the Microsoft bid.