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Microsoft Reportedly Suiting Up for Proxy Battle for Yahoo

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Microsoft Reportedly Suiting Up for Proxy Battle for Yahoo

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Microsoft and Yahoo aren’t negotiating a deal behind the scenes, according to what Bill Gates told the AP this morning, 18 days after Microsoft made its rejected $31-a-share offer for the company.

And it appears that Microsoft, whose stock has been down 12.8% since publicizing the offer, isn’t prepared to up the ante – at least not yet – not at the cost of $1.4 billion for every dollar of sweetener – nosiree.

“We sent them a letter and said we think that’s a fair offer,” the news service quotes Gates as saying. “There’s nothing that’s gone on other than us stating that we think it’s a fair offer. They should take a hard look at it.”

But in case Yahoo, which reportedly wants $40 a share, needs a persuader to come to the table and deal, “people briefed on the matter” told the New York Times this morning that Microsoft is going to start a proxy fight for Yahoo this week.

It will nominate a slate of directors to replace Yahoo’s by March 13, the drop-dead date, and then seek to get them seated. The Times points out that all of the members of Yahoo’s board are up for nomination because it doesn’t have a staggered board.

Such a maneuver would only cost Microsoft an estimated $20 million-$30 million for lawyers and such – that and perhaps the good will of some of the Yahoo people it’s trying to buy to level the playing field with Google.

If Microsoft is forced into a proxy fight it’ll add months to any takeover, which is already going take a long time because of the regulatory gauntlet it’s going to have to run.

And if Microsoft loses the proxy fight, well, it’s probably pretty safe to assume that Yahoo’s bid-up-on-anticipation stock price will crater.

Of course there are those who think that if Microsoft does buy Yahoo, it’ll wind up writing off the whole investment in a few years.

Microsoft’s stock was up a point or so this morning on the news.

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