Yahoo set to rebuff Microsft's bid

Yahoo Inc is set to reject Microsoft corporation's unsolicited bid, now worth $42 billion, as too low, a source familiar with the situation told. The first clear signal the board might be prepared to negotiate and sell the Internet giant.

The Wall Street Journal had quoted an unnamed source as saying Microsoft's offer of $31 per share was an attempt to 'steal" the company and that Yahoo was unlikely to consider anything under $40 per share - double its price in January. At that level, the value of the cash and stock deal would be worth $51.1 billion.

If completed, a merger of Microsoft and Yahoo would be the world's largest of two computer technology companies and create a formidable rival to Internet search and advertising leader Google Inc.

Yahoo has been considering options, including negotiating a higher price and striking a deal with Google to take over its search operations to keep Yahoo independent, the Journal said.

The newspaper reported Yahoo's board meet on Friday.

No alternate bidder has emerged and Wall Street has been betting that the likeliest outcome was for Yahoo Inc's board to negotiate for a higher price from Microsoft.

"Are they really serious about nothing less than $40 or is it a negotiating tactics to try to get a richer price?" Global Crown Capital analyst Martin Pyykkonen said, "To me it sounds like a counter-negotiation tactic. May be they end up setting for $35, $36 or $37 a share."

Microsoft offers to acquire Yahoo Inc.

The world's largest software-maker Microsoft offered on Friday to acquire leading Internet firm Yahoo Inc. for about $44.6 billion with an aim to leverage its position in the online service market.

The Bill Gates, founded Microsoft said that its $31-per-share offer values Yahoo! at about $44.6 billion in cash and stock (62% premium above the latter's closing stock price on the Nasdaq on Thursday).

The offer was disclosed first letter sent to Yahoo! Board of Directors on Thursday by Microsoft CEO Steven Ballmer.

The take-over bid for Yahoo! comes amid a below-expected fourth quarter performance and growing competition for the two companies from fast-growing Google in the online market.

The online advertising market is growing at a very fast pace, from over $40 billion in 2007 to nearly billion $80 by 2010.

with Google emerging as one of the biggest beneficiary of this market, analysts believe that a combination of Microsoft and Yahoo was imminent to take on the competition from the Internet Search giant.

Microsoft's proposal would allow Yahoo shareholders to opt cash or a fixed number of Microsoft shares, with the total consideration payable to Yahoo shareholders consisting of one-half cash and one-half Microsoft common stock.

The company said it believes the proposed combination would receive all necessary regulatory approvals and the proposed transaction would be completed in the second half of calendar year 2008.

Microsoft also said it intends to offer significant retention packages to Yahoo engineers, key leaders and employees across all disciplines.

Yahoo Inc. confirmed on Friday that it had, indeed, received an unsolicited bid from Microsoft Corporation to acquire the company, and added that its Board of Directors would consider the $44.6 billion deal in due course of time.

Yahoo issued a statement which said that its board would evaluate the proposal "carefully and promptly in the context of the firm's strategic plans and pursue the best course of action to maximize long-term value for shareholders.

So hope a tough competition for Google from Microsoft in Online Marketing.