Yahoo is interested in Microsoft’s offer after getting rejected

Yahoo seemingly made its position absolutely clear — it felt Microsoft’s offer of $31 a share, a 62 percent premium on current prices at the time of the offer, was unfair and undervalued the company. It argued that anything less than $37 a share, or roughly a 91 percent premium on the price at the time, would be unsatisfactory. However, it didn’t take long for Yahoo to apparently start hoping that Microsoft would consider pursuing it again. In a move like something out of a television drama, the company announced only 48 hours after Microsoft dropped its bid that it would be willing to negotiate for a sub $37 price and that it would be happy to reopen talks with Microsoft.

Chairman Roy Bostock indicated that Yahoo’s stubbornness on the $37 dollar price was basically an effort to get a bit more money out of Microsoft and it really didn’t hope to get that much. He told the Wall Street Journal, “Listening to shareholders is very important but you’ll get lots of points of view…we think a fair value for the company is $37. It was not a take-it-or-leave it statement.”

Yahoo is getting blasted by its largest shareholder, Capital Research Global Investors, one of the most respected investment institutions on Wall Street. Gordon Crawford, a portfolio manager with the firm remarked in the WSJ article, “I’m extremely disappointed in Jerry Yang, I think he overplayed a weak hand. And I’m even more disappointed in the independent directors who were not responsive to the needs of independent shareholders.”

Itt appears that the price has dropped to $34, but it remains to be seen if Microsoft shows any interest in the company after it made up its mind to reject it. Microsoft has said it will remain open to offers, but at this point it has to wonder — if Yahoo only took this long to drop the asking price $3, how much longer will it really take for Yahoo to drop $3 more to the original asking price? The only thing that seems sure at this point is that there’s sure to be more drama between the pair.