$44.6 billion may seem like a ludicrous amount to say no to but that’s just what Yahoo plans to do, says a source. Microsoft’s bid isn’t enough for Yahoo to sell out to the world’s biggest software firm.

Bloomberg’s source claims that Yahoo! Inc.’s board reviewed the $31-per share offer and  decided to hold out for at least $40 instead. Scott Kessler of Standard & Poor said it was just gamesmanship on Yahoo’s part. “Microsoft is well aware that Yahoo doesn’t have any other options. What this is about is how much Microsoft wants Yahoo and how much time they’re willing to wait to get this deal done.”

Microsoft and Yahoo spokespeople declined to comment on the rumour. But should the board reject the offer, there is speculation Microsoft may try to oust Yahoo’s directors. Reason for that? Well, take a look at this paragraph from Microsoft CEO Steve Ballmer’s letter to Yahoo’s board: “Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!’s shareholders are provided with the opportunity to realize the value inherent in our proposal.

Both companies’ shares rose on the news of the bid, with Yahoo’s going up 16 cents to $29.20 and Microsoft, 44 cents to $28.56. Yahoo rose 16 cents to $29.20. How will the stocks fare now if the deal goes south?

Yahoo has few other options if they spurn Microsoft. Google CEO Eric Schmidt has contacted Yang about a possible partnership but News Corp’s Rupert Murdoch denied any interest in Yahoo in a Feb. 4 conference call.

If they do take up Google’s offer, there will be regulatory scrutiny. Yet it’s not like a Microsoft-Yahoo teamup wouldn’t. U.S. Justice Department spokeswoman Gina Talamona said the department is ‘interested’ in reviewing possible antitrust implications. Her statement was echoed by Neelie Kroes, commissioner of competition for the European Commission.

Yahoo’s future seems to be in trying to determine the lesser of two evils: Google or Microsoft? Whatever happens, the search scene is going to be anything but dull this year.

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Entry was posted on Sunday, February 10th, 2008 at 2:18 am under Google, Microsoft, Yahoo!.

Read more entries by Erna Mahyuni.
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