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On the other hand, suppose Microsoft then raises its bid to $33/share, and then News Corp. holds its bid at $32/share. Could Yahoo's board still take News C
by neilc 19y ago
On the other hand, suppose Microsoft then raises its bid
to $33/share, and then News Corp. holds its bid at
$32/share. Could Yahoo's board still take News Corp.'s
bid in preference to Microsoft's? In a word: no. When a
board is presented with multiple offers, it can either
take the highest objective offer or it can turn down all
the offers. It cannot take an offer lower than the
highest objective offer.
That makes absolutely no sense to me -- the board should have the ability to discriminate among offers on factors beyond the mere acquisition price. Suppose there is an insignificant difference in price between two offers, but one of the offers makes more strategic sense -- in terms of how the new company will align with the buyer's current interests and assets, the buyer's long-term proposed strategy, the strength of their management team, the buyer's financial condition, etc. Forcing the board to choose the higher offer seems remarkably short-sighted: shouldn't the board be concerned with maximizing long-term shareholder value?
- emmett 19y agoThe shareholders are getting paid right now. That is their long term value. Microsoft buys Yahoo, shareholders get a 50% premium on the value of their shares cash. Like he says, if part of the offer is in stock, you can use long term projections of the value of that stock as part of the valuation. But it's unlikely Microsoft stock will fall greatly any time soon.
- rbanffy 19y agoWell... Bill promised Windows 7 by mid 2009. If it fails as completely as Vista, there won't before much long-term value for Microsoft out of the corporate high-inertia market. Either way, it will be fun to watch.
- johnrob 19y agoThis is why I balk at public companies sporting mottos like "Don't be evil". All public companies have one and only one motto, "Maximize shareholder value". If you can carry out additional objectives, that's great, but no motto will trump profit.
- davidw 19y agoI'm not saying I disagree, but consider why this may be so: you would be pretty peeved as a shareholder if the board sold to their friends for significantly less money.