Yahoo Rejects Microsoft Bid - Yahoo’s Options
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So what options does Yahoo have if Microsoft gets pushy? As with many large companies, it’s widely known that Yahoo has “poison pill” provisions in case of a hostile takeover. These were adopted in 2001. They stipulate that if anyone buys 15 percent or more of Yahoo’s stock in a hostile takeover, then shareholders can buy extra shares, which would dilute stock ownership. Microsoft’s resources are substantial, but they are hardly infinite.
Yahoo could also go to the Department of Justice to complain about antitrust issues and try to stave off the takeover. This has been tried before in other situations. PeopleSoft attempted it five years ago when Oracle targeted the software company for a hostile takeover. The Department of Justice filed a lawsuit in an attempt to block Oracle. Ultimately, it didn’t work; the suit was overruled by a federal judge, and PeopleSoft had to accept Oracle’s $10.3 billion offer in 2004, after 18 exhausting months.
Or Yahoo could seek other partners with whom to merge – someone who’d be a better fit and harder for Microsoft to swallow. The possibility of a deal with Google keeps coming up in the press, despite the anti-trust, monopoly, and regulatory implications. Yahoo is arguably more about content than search, so the idea of it looking to Disney for a deal is not as far-fetched as it might seem at first glance.
Media reporting on Microsoft’s rejected bid usually mention the Disney possibility in the same paragraph as a stronger one: a Yahoo merger or alliance with Time Warner’s AOL. Search Engine Journal notes that “the core to a Microsoft alternative could be that Time Warner is more of an entertainment and content company, fitting the Yahoo model and would give the company the ability to become strong partners with CNN, Time.com, and other Time Warner properties.”
But all of this assumes that Yahoo is really that desperate to get Microsoft out of the picture once and for all. There is certainly a contingent at Yahoo who would fight any Microsoft deal, even to the point of making life difficult for Microsoft after a merger. But there are other forces at work too. Reuters noted that “A dissident group of Yahoo shareholders…launched a campaign to sell their shares as a block. Eric Jackson, leader of a group of shareholders representing less than 1 percent of Yahoo shares, said his group was prepared to negotiate separately with Microsoft or any other bidder.”
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