Yahoo to take time evaluating Microsoft offer  

Washington, Febraury 3: Yahoo Inc says it's 'going to take time' to thoroughly evaluate Microsoft Corp's unsolicited $45 billion offer keeping in mind its strategic options, including keeping the company independent.

It was undertaking a deliberate review of Microsoft's offer to pay Yahoo shareholders either $31 in cash, or 0.9509 of a share of Microsoft common stock, Yahoo said in a media release posted on the company Web site.

'Will take time'

The review 'will include evaluating all of the company's strategic alternatives including maintaining Yahoo! as an independent company,' the posting said. 'A review process like this is fluid, and it can take quite a bit of time.'

'They're going to take time to thoroughly evaluate the proposal in the context of Yahoo!'s strategic plans...including maintaining Yahoo! as an independent company.

'That process will take some time, but the board will ultimately pursue the option that it believes can best maximise value for our shareholders.'

In response to a frequently asked question about whether Yahoo would seek proposals from other companies, the company said its board 'is going to evaluate all of Yahoo!'s strategic alternatives and pursue the option that it believes can best maximise value for our shareholders'.

In reply to another question about what would a deal like this mean for Yahoo's users, advertisers, publishers, partners and people, it said as the Yahoo's board is going to evaluate all aspects of this proposal it wouldn't be appropriate to speculate about the potential benefits or challenges of a deal.

'But the review process that's underway won't have any impact on our efforts to deliver value to all of our users, advertisers, publishers and partners - as well as new and exciting opportunities to our employees.'

Confronting Google's dominance

Meanwhile, the Wall Street Journal said Microsoft's offer for Yahoo representing a 62 percent premium over the Internet company's recent share price is a sign of its determination to narrow Google's growing lead in the online advertising and web search-engine wars.

By absorbing Yahoo, Microsoft hopes to gain the heft it has long sought with consumers, advertisers and other online publishers, providing access to roughly 500 million world-wide monthly users of Yahoo's Internet services. These range from email to online dating and help generate Yahoo's roughly 16 percent share of total US online-ad revenue.

The bid is the biggest Internet-related deal since the 2001 merger between America Online Inc. and Time Warner Inc.

For Microsoft, the move is an acknowledgment that its expensive foray into online services is failing, or at least not moving fast enough, the daily said. The company has tried to build a strong presence in Internet search and other online services. But it hasn't dented Google's leading market share or stayed in step with the growth of online advertising.

While Google continues to add new services at a rapid rate, its two biggest competitors could be distracted by the complications associated with combining their operations. Google also may get a greater opportunity to poach any staff from Yahoo's Silicon Valley headquarters, which are near its own.

Bad news for smaller players

The deal could potentially be bad news for some smaller Internet players such as Time Warner Inc.'s AOL and IAC/InterActiveCorp's Ask.com search engine. Both could see themselves marginalized with consumers and advertisers. Officials at Time Warner, AOL and IAC declined to comment, the Journal said.

Any deal could also close off an option for Time Warner's new CEO Jeff Bewkes, who is currently trying to decide whether to hold onto AOL. Microsoft and Yahoo were long seen as the most obvious suitors for the online business. Their combination would likely rule that out.

Industry experts say the size of the deal, and Microsoft's war chest and determination for going after it, could deter other bidders from emerging. eBay Inc., AOL, AT&T Inc. and News Corp. (owner of Dow Jones & Co., publisher of The Wall Street Journal) are among the other companies that have at various moments and with different levels of seriousness discussed possible combinations with Yahoo over the years.

A Yahoo purchase by Microsoft would rank as the biggest-ever pure technology deal, nearly two times as big as Lucent Technologies' $23.9 billion purchase of Ascend Communications Inc. in 1999 and eclipsing HP's acquisition of Compaq in 2002, Dealogic says.

Any combination would likely attract the attention of antitrust enforcers and lawmakers in the US and Europe, possibly delaying a completed deal for six months or more.

But the Wall Street Journal cited merger-law experts as predicting that a buyout ultimately would win approval-even in Europe. Authorities there filed antitrust charges against Microsoft and have been closely scrutinizing Google's proposed purchase of DoubleClick, an online advertising-services firm.