Microsoft bid for Yahoo turns into game of chicken

Yahoo takeover battle turns into a game of chicken

Analysis - Microsoft plays hardball on price, though some still see higher bid

By Benjamin Pimentel, MarketWatch

Last Update: 3:15 PM ET Apr 7, 2008

SAN FRANCISCO (MarketWatch) - Microsoft Corp.’s bold bid to gobble up Yahoo Inc.
seems to have transformed from a waiting game into a game of chicken.

Microsoft’s (MSFT) threat of a proxy war and a lower bid price based on a
three-week deadline underscores the software giant’s determination to acquire the
struggling Internet portal, analysts say.

It also to points to twin pressures on Microsoft not to give in to the temptation
to raise its price just to get the deal done - and to close the transaction as
quickly as possible to prevent the proposed merger’s value from heading even
further south.

Over the weekend, Microsoft CEO Steve Ballmer sent a letter to Yahoo (YHOO),
setting a three-week deadline for Yahoo to agree to the company’s takeover offer
or face a proxy battle - and potentially lower price. On Monday, Yahoo CEO Jerry
Yang and Chairman Roy Bostock stuck back, reaffirming its position that
Microsoft’s offer is too low.

They also downplayed Microsoft’s threat of a proxy war saying the Yahoo board has
the support of the company’s shareholders.

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