Reports through the Wall Street Journal and wires services say the Yahoo board believes the Microsoft offer greatly undervalues the internet pioneer.
The reports say that Microsoft’s US$31 per share bid for the company does not take into account the risks that face Yahoo if it pursues a deal that may ultimately be shot down by regulators.
It is thought the board also believes Microsoft is simply trying to take advantage of Yahoo soft share price – the number two search company has struggled in recent months – to pick up a bargain.
Yahoo management is thought to be seeking closer to $40 per share – an offer than would cost Microsoft a further US$15 billion.
A rejection by Yahoo would set the scene for a potentially ugly takeover battle that may ultimately sink any hope for a quick deal. Critics of the tie-up already point to the vastly different corporate cultures in Yahoo and Microsoft and say integrating the businesses would be extremely difficult.
Yahoo chief executive officer Jerry Yang last week wrote to staff indicating the company’s board was investigating “strategic alternatives” to the Microsoft takeover – the first indication that the company was did not altogether welcome the bid.
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