Yahoo officially rejects Microsoft takeover bid

Yahoo, the embattled internet portal and advertising giant has spurned the advances of software giant Microsoft, for now at least, turning down its $44.6 billion (£22.3 billion) unsolicited cash and shares offer.

In a statement issued a short time ago, the company confirmed that it was rebuffing the offer after a week of consideration and assessment.

"After careful evaluation, the board believes that Microsoft's proposal substantially undervalues Yahoo including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments," the statement said.

The snub is in line with IT PRO's report this past weekend when sources close to the discussions confirmed that the board felt the deal undervalued the company, and that more value for shareholders could be extracted from the existing business remaining as an independent entity.

"The bid in its current form undervalues the business, and the board believes that management can return more value to shareholders by executing its turnaround plan for Yahoo," said our source on Saturday.

However, the board has not ended talk of a deal, signing off the official statement with a line that suggests a higher bid from Microsoft or another interested party might be viewed more favourably: "The board of directors is continually evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximise value for all stockholders."

Microsoft has not issued a counter statement at the time of writing, as it considers the ramifications of Yahoo's rejection and its next move.

"It seemed like a pretty good offer for shareholders at the time," said Bob Tarzey, service director at Quocirca.

"Yahoo is really up against it with Google in the search market at least, but it has some excellent assets, particularly its email user base and its Flickr photo service."

"I don't know if Microsoft can afford to come back with an improved bid, but if Yahoo is trying to hold out for a better deal it seems like a brave move. At the end of the day, Yahoo has to get the best deal for shareholders, and I don't see it doing that by holding out for a white knight."

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