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WSJ Says Yahoo Will Reject Microsoft’s Offer

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Quoting an unidentified source, the Wall Street Journal is now saying that Yahoo intends sending Microsoft a letter Monday rejecting its $44.6 billion offer as “massively undervaluing” the company and ignoring the risk to Yahoo if the regulators ultimately turn thumbs down on the merger.

According to paper’s source, the Yahoo board wants at least $40 a share, which would be something like $57 billion, a staggering amount that Microsoft may not be prepared to shell out.

Yahoo is apparently gambling that Microsoft won’t try to dismantle its poison pill defenses by unseating the current board – a course it could conceivably take – and go directly to Yahoo shareholders.

Such a move, the Journal observes, could cause “deep resentment” among the rank-and-file engineers that Microsoft needs on its side to make a success of any merger and could have Yahoo’s management complaining to the regulators that the deal is anti-competitive.

Unfortunately for Yahoo its management has yet to come up with a strategy to shake the company out of its lingering malaise other than subcontracting its search advertising to Google, a plan Microsoft is sure to oppose – as well as possibly the regulators.

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