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Yahoo Set To Spurn Microsoft Takeover Bid

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By MICHAEL LIEDTKE, The Associated Press

Published: February 10, 2008

SAN FRANCISCO - Yahoo Inc.'s board, concluding that Microsoft Corp.'s $44.6 billion takeover bid undervalues the slumping Internet pioneer, plans to reject the unsolicited offer, a person familiar with the situation said Saturday.

The decision, first reported by The Wall Street Journal on its Web site, could trigger a showdown involving two of the world's most prominent technology companies.

If it wants Yahoo badly enough, Microsoft could try to override Yahoo's board by taking its offer - originally valued at $31 per share - directly to the shareholders.

If Microsoft pursued that risky route, it likely will have to nominate its slate of directors to supplant Yahoo's current 10-member board.

Alternatively, Microsoft could sweeten its bid. Many analysts think Microsoft is prepared to offer as much as $35 per share for Yahoo, which still boasts one of the Internet's largest audiences and most powerful advertising vehicles despite a prolonged slump that has hammered its stock.

Yahoo's board reached the decision after exploring a variety of alternatives during the past week, according to the person who spoke to The Associated Press. The person didn't want to be identified because the reasons for Yahoo's rebuff won't be officially spelled out until Monday morning.

Microsoft and Yahoo declined to comment Saturday.

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