Microsoft is now making noise that they may raise the amount of the hostile takeover bid they have made for Yahoo. This comes as a complete about face from its earlier stance that it would not budge on the price already offered. It also signals that Microsoft needs Yahoo more than Yahoo needs them at this point, in order to break into the online market.

The raise in offer was announced after a closed door session at Microsoft about the proposed takeover. The original offer was valued at roughly $29 a share. The proposed new amount would be as much as $33 per share, a significant increase. The value is determined by the worth of shares on paper plus other factors, like debt ratio and financial holdings,

Yahoo’s board has been holding out against shareholder wishes for several months now, vying for a higher bid or to avoid the takeover altogether. This move by Microsoft proves their strategy to be sound and gives them some vindication to the shareholders and other naysayers.

Will a higher offer move the process along? I think it will bring the process to a head and either push a fast resolution or cause enough conflict that the takeover bid is dropped altogether. Either way, Yahoo seems to be coming out the over all winner in this one: either they are getting more than what the company is logistically worth in a take over win by Microsoft, or they get left alone – what they’ve wanted all along anyway.

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Entry was posted on Thursday, May 1st, 2008 at 3:02 pm under Microsoft, Yahoo!.

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