Yahoo board snubs Microsoft

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NEW YORK -- Yahoo's board of directors said Monday that it would reject Microsoft's unsolicited $44.6 billion acquisition offer, arguing that it undervalues the company.

In what has been termed as a bid for a "hostile takeover," Microsoft went public with the half-cash/half-stock deal this month as Yahoo's stock price continued to drop. The two companies had been in talks for a year and a half and, though Yahoo has struggled in recent years, Microsoft still sees values in its large online audience and search and advertising businesses as it continues to battle with Google.

Yahoo reportedly had a board meeting Friday to discuss the offer, and word broke over the weekend that the company would spurn Microsoft's offer. In an official statement on Monday, Yahoo said it "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 maximize value for all stockholders."

Some have suggested that Microsoft could raise the price for the acquisition, which was already seen as a generous offer, or it could go around Yahoo's board appeal directly to the shareholders. Others have suggested that Yahoo could outsource its search business to Google or look to other media companies or private equity funds to buy it up instead of Microsoft.

Other reports Monday also mentioned that Yahoo could revive deal talks with AOL, in an effort to keep itself safe from Microsoft. The two companies are reportedly considering merging, an idea that had been considered in the past.

Google has a 5% stake in AOL and, in the wake of Microsoft's proposal, some suggested that the search giant could buy the Time Warner-owned portal.
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