Yahoo moves to check Microsoft’s takeover gambit
Yahoo's lifting of the March 14 deadline, without fixing a precise new date, sought to buy time as Microsoft was believed planning an attempt to oust the California firm's 10 directors and replace them with a slate favorable to its 44.6 billion dollar cash-and-stock offer for the company.
Yahoo has been "pursuing strategic alternatives" that reportedly include courting a "white knight" to help it rebuff the unwanted suitor.
"This is a bob and weave in the face of a proxy fight," Gartner analyst Van Baker said of Yahoo extending the deadline.
"It's pretty clear that the Yahoo management team does not want to be acquired by Microsoft, but at the same time it is clear they are having a hard time outright rejecting the bid because it is a reasonable offer."
Microsoft's offer of 31 dollars per share was 62 percent above the Yahoo stock trading price when the offer was made on February 1.
Yahoo's board of directors has indicated it thinks the company is worth at least 40 dollars per share, a price that would compel Microsoft to raise its offer more than 10 billion dollars.
Yahoo stock was trading at nearly 29 dollars per share on Thursday, with investors factoring the Microsoft takeover bid into the price.
Yahoo's board of directors has a duty to shareholders to maximize the company's value, putting pressure on them to quickly come up with a way to increase the struggling Internet veteran's worth or accept the Microsoft offer.
By delaying the nomination date for directors, Yahoo gives itself time to find a corporate ally that will bolster its financial prospects and make Microsoft's offer unattractive to shareholders.
"The larger the acquisition, the more it begins to resemble a Kabuki dance or sorts," said analyst Charles King of Pund-IT in California.
"Delaying nominations for board of directors gives Yahoo more time to look for white knights and complicate the terrain for Microsoft."
Yahoo said it amended its bylaws to change the deadline for nominating directors from March 14 to 10 days after it announces the date of its annual stockholders meeting.
The extension lets board members focus on alternatives to a Microsoft takeover without "the distraction of a proxy contest," Yahoo said in a written release.
"The amendment does not preclude any party from nominating one or more directors at any time prior to the new deadline," Yahoo said.
"As the company has not yet announced the date of this year's annual meeting, the amendment will give stockholders who want to nominate one or more directors, including Microsoft Corporation, more time to do so."
Yahoo is said to be courting faded Internet star AOL, owned by media colossus Time Warner. Yahoo has also reportedly been in talks with News Corp., which owns social networking website MySpace.
The chief of Internet search king Google is said to have his called Yahoo counterpart Jerry Yang directly to offer support in fighting off a Microsoft takeover.
Google has condemned Microsoft's effort as an attack on "the underlying principles of the Internet: openness and innovation."
Google could offer Yahoo help generating money from online advertising but a partnership would be unlikely to clear antitrust hurdles set by regulators.
Analysts say the goal of the takeover is to better compete with Google, whose dominance of Internet advertising, backed by its powerful search engine technology, has come at the expense of Microsoft and Yahoo.
"It's a tough situation for Yahoo and they are trying delaying tactics and such to give themselves more breathing room," Baker said.
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