Microsoft Talks Tough; Proxy Battle Likely

Gates says Yahoo should 'take a hard look' at $41.6B bid
By Jim O'Neill,  Newser Staff
Posted Feb 20, 2008 9:53 AM CST
Microsoft Talks Tough; Proxy Battle Likely
This combination of two file photos shows Microsoft CEO Steve Ballmer, left, and Yahoo CEO Jerry Yang. Yahoo Inc. on Monday, Feb. 11, 2008 spurned Microsoft Corp.'s $44.6 billion takeover bid as inadequate, betting that it can elicit a higher offer from the world's largest software maker or find another...   (Associated Press)

Microsoft, at loggerheads with Yahoo over its $41.6-billion offer for the popular web portal, is talking tough, threatening a proxy battle to unseat Yahoo’s reticent board of directors, reports the Wall Street Journal. But even a win, which experts say would be relatively cheap to achieve, could cost Microsoft in the form of Yahoo employee animosity and attrition.

Microsoft investors, meanwhile, aren’t as certain that Yahoo’s as much a “must have” as is Bill Gates, who yesterday advised Yahoo to "take a hard look" at the deal; since the $31-per-share offer, Microsoft’s stock is down 14%. Yahoo yesterday rolled out enhanced severance benefits—up to two years' salary—for employees who might be laid off after a purchase, making a takeover that much more expensive for Microsoft. (Read more Yahoo stories.)

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