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Yahoo Rejects Microsoft's Proposal

Microsoft's US$44.6 billion proposal was not enough to entice its board of directors.

By David Worthington

February 11, 2008 — Microsoft’s US$44.6 billion buyout offer is not rich enough for Yahoo’s blood. Today, its board of directors formally declined the offer and issued a statement disqualifying the proposal as substantially undervaluing Yahoo.

The board, its management team and financial and legal advisors, unanimously concluded that the proposal, which it deemed as “unsolicited,” was not in the best interest of Yahoo and its stockholders. The board has retained Goldman, Sachs & Co., Lehman Brothers and Moelis & Company as financial advisors.

“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 read.

In the interim, the board said that it would continue to evaluate all of its strategic options to maximize value for its shareholders in the context of the “rapidly evolving industry environment.”

But there are not any more known suitors knocking at its door. Last week, an internal e-mail sent by Yahoo CEO Jerry Yang to all employees noted that the company had not received any alternative proposals.

When asked whether it would continue to pursue ownership of Yahoo, including whether it was willing to pay more per share, a spokesperson said that Microsoft has no comment at this time.

Microsoft has the option to bypass the board of directors and take the proposal directly to Yahoo’s shareholders in a hostile takeover.

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