Microsoft not upping Yahoo! bid – Still targeting web search

The big man has spoken, and insisted that Microsoft will not be upping its bid for Yahoo! from the $44.6 billion already on the table. The company will however, be investing heavily in web search, with or without Yahoo!, to try and compete with Google.

It was way back at the beginning of February when Microsoft offered the Yahoo! board of directors a sizeable $44.6 billion for all outstanding stocks. This valued each share in the company at $31, a very fair offer when you look at how much trouble Yahoo! has been in of late.

Yahoo!’s board of directors then rejected the offer, and decided to hold out for nearer to $40 per share. So is it all over, end of discussion, no deal done? Well, according to Bill gates, during a phone interview on Monday, Microsoft will not be raising its offer, and are sticking firmly to the $31 per share valuation.

According to Yahoo! News (oh the irony), he said:

“We sent them a letter and said we think that’s a fair offer. There’s nothing that’s gone on other than us stating that we think it’s a fair offer. They should take a hard look at it.”

So no movement on that side of the fence for now at least. Although analysts believe that now the offer has been rejected, other options have become a distinct possibility.

Microsoft’s next move could now be to take the offer directly to Yahoo’s shareholders, bypassing the board of directors completely. Or alternatively, a hostile takeover of Yahoo’s board could be attempted.

Gates meanwhile, in his last year as active chairman of the company, insists that regardless of Yahoo! involvement or otherwise, Microsoft still plans to invest heavily in web search, in an effort to compete against Google, a companythat Gates claims is the only one with “critical mass” in web search terms.

Again according to Yahoo! News, he said:

“We can afford to make big investments in the engineering and marketing that needs to get done. We will do that with or without Yahoo,”

“But we also see that we’d get there faster if the great engineering work that Yahoo has done and the great engineers there were part of the common effort.”

Love them or loathe them, it seems Microsoft isn’t going to give up the web search business without a fight, and is going to fight Google’s dominance all the way. Whether it can takeover Yahoo!, by any means necessary to help it on its cause is another matter entirely, and one which could come down to the shareholders.

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