Here is the official letter sent by Microsoft official to Yahoo! Board of Directors.
January 31, 2008
Board of Directors
701 First Avenue
Sunnyvale, CA 94089
Attention: Roy Bostock, Chairman
Attention: Jerry Yang, Chief Executive Officer
Dear Members of the Board:
I am writing on behalf of the Board of Directors of Microsoft to make a proposal for a business combination of Microsoft and Yahoo!. Under our proposal, Microsoft would acquire all of the outstanding shares of Yahoo! common stock for per share consideration of $31 based on Microsoft’s closing share price on January 31, 2008, payable in the form of $31 in cash or 0.9509 of a share of Microsoft common stock. Microsoft would provide each Yahoo! shareholder with the ability to choose whether to receive the consideration in cash or Microsoft common stock, subject to pro-ration so that in the aggregate one-half of the Yahoo! common shares will be exchanged for shares of Microsoft common stock and one-half of the Yahoo! common shares will be converted into the right to receive cash. Our proposal is not subject to any financing condition. Continue reading
Microsoft just announced what has been rumored forever: a formal offer for Yahoo. Microsoft’s proposal to Yahoo’s board of directors represents $31 per share (a 62% premium over yesterday’s closing price) or about $44.6 Billion. Steve Ballmer, CEO and big fan of developers, says, “We have great respect for Yahoo!, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market.” Apparently, the deal was laid out in a letter sent by Ballmer to Yahoo’s board just yesterday. Seriously. The letter confirms that the two giants have been discussing the topic since late 2006. It also appears to be a direct response to the Google threat as outlined in the following paragraph:
“Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition. Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers, and publishers.”
The deal, of course, rests with the two coming to a “merger agreement” and Microsoft (and Yahoo to a limited degree) having the time to conduct the required due diligence. Microsoft is ready to begin immediate discussions and have a draft merger agreement ready for consideration. So Yahoo, ball’s in your court. The world is wondering… what will you do?