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Strategies & Market Trends : Speculating in Takeover Targets -- Ignore unavailable to you. Want to Upgrade?

To: richardred who wrote (1888)	2/1/2008 7:23:38 PM
From: richardred	Respond to of 7259

How Microsoft-Yahoo deal can get regulatory OK template_bas template_bas The prospect of a stronger competitor to Google could be enough to satisfy antitrust regulators in the U.S. and Europe, observers say. But the size of a unified company will bring scrutiny. By Jim Puzzanghera, Los Angeles Times Staff Writer 1:16 PM PST, February 1, 2008 WASHINGTON -- The U.S. Justice Department said today it would review Microsoft Corp.'s proposed $44.6-billion takeover of Yahoo Inc., if accepted, foreshadowing the intense scrutiny such a deal would face from U.S. and European regulators because of its size and Microsoft's previous antitrust problems. But the prospect of a stronger competitor to Google Inc. in Internet search and advertising would overwhelm concerns about Microsoft's checkered past, antitrust experts said. "The simple notion is competition is good for consumers," said Robert Hahn, executive director of the Center for Regulatory and Market Studies at the American Enterprise Institute, a Washington think tank. "Google may have a real rival now in online search and be subject to more competitive pressures in advertising. Regulators would take that into account." Regulators already are paying attention. The Justice Department's antitrust division would look at the deal if Yahoo accepted Microsoft's bid, spokeswoman Gina Talamona said. European regulators also would have to give their approval before the deal could go forward. Sen. Herb Kohl (D-Wisc.), chairman of the Senate's antitrust subcommittee, promised to hold hearings. "We will need to scrutinize the deal carefully to insure that it will not cause any harm to the competitiveness of what has been a vibrant high-tech marketplace, nor negatively impact the privacy rights of Internet users," Kohl said in a statement. Microsoft said it expected the proposed takeover of Yahoo to receive all the necessary regulatory approvals to be completed in the second half of the year. Antitrust regulators in the U.S. and European Union are familiar with Microsoft, dating to battles that began in the 1990s. A U.S. judge this week extended court oversight of Microsoft until November 2009. Judge Colleen Kollar-Kotelly has been monitoring Microsoft's compliance since the 2002 settlement of a landmark antitrust case against the Redmond, Wash., company for abusing its dominance in the computer operating software market. The European Union this month announced two new investigations of Microsoft related to whether it used its dominance in word processing and spreadsheet programs to squelch rivals and illegally tied its Internet browser to its Windows operating system. The probes followed Microsoft's decision last fall to overhaul its businesses practices and pay a $739-million fine, ending a nine-year fight with European officials over antitrust issues. Regulators can't ignore Microsoft's "bad boy" history in competing with rivals, said Dennis Oswell, a European Union antitrust lawyer. "You can be sure that if this was 'Company X' this deal would not receive the same amount of scrutiny," he said. "Microsoft is a very, very dominant player, and any time it goes into a neighboring market it's going raise all sorts of questions." But Microsoft is a much smaller player in that neighboring market -- Internet search and advertising -- compared with market leader Google. European regulators might be more interested in allowing a potential Microsoft-Yahoo combination to create a strong alternative for consumers and advertisers, Oswell said. The same calculation could take place in Washington, where regulators last year approved Google's purchase of leading online advertising company DoubleClick Inc. They might want to ensure that there is a strong competitor in that growing market, said David Lisi with the Silicon Valley law firm Howrey LLP. But Lisi said Yahoo's strong position in instant messaging software and free Internet e-mail could lead regulators to seek assurances that Microsoft wouldn't improperly tie those products to Windows in a way that thwarts rivals. "With respect to e-mail and instant messaging, that just gives Microsoft a much greater tool to drive advertising and also to collect information," he said. The data collection power of a combined Microsoft and Yahoo is something federal regulators and Congress should consider, said Jeff Chester, executive director, of the Center for Digital Democracy. "This merger poses new privacy threats to consumers everywhere," he said. Chester's group strongly opposed Google's purchase of DoubleClick, which is being held up while European regulators study it. But given the deal's approval by the Federal Trade Commission, Chester acknowledged that the need to provide a stronger competitor to Google might ease the way for a Microsoft purchase of Yahoo. Still, he would be worried about the three dominant Internet companies turning into two. "These two companies will have tentacles everywhere," he said. "There will be three places in the United States that know a lot about you -- Google, Yahoo and the National Security Agency." jim.puzzanghera@latimes.com latimes.com

To: richardred who wrote (1888)	2/10/2008 12:09:51 AM
From: richardred	Read Replies (2) \| Respond to of 7259

Yahoo Board to Spurn $44B Microsoft Bid Saturday February 9, 11:37 pm ET By Michael Liedtke, AP Business Writer Yahoo Board Intends to Turn Down Microsoft's Unsolicited $44.6 Billion Takeover Bid SAN FRANCISCO (AP) -- Yahoo Inc.'s board will reject Microsoft Corp.'s $44.6 billion takeover bid after concluding the unsolicited offer undervalues the slumping Internet pioneer, a person familiar with the situation said Saturday. The decision could provoke a showdown between two of the world's most prominent technology companies with Internet search leader Google Inc. looming in the background. Leery of Microsoft expanding its turf on the Internet, Google already has offered to help Yahoo avert a takeover and urged antitrust regulators to take a hard look at the proposed deal. If the world's largest software maker wants Yahoo badly enough, Microsoft could try to override Yahoo's board by taking its offer -- originally valued at $31 per share -- directly to the shareholders. Pursuing that risky route probably will require Microsoft to attempt to oust Yahoo's current 10-member board. Alternatively, Microsoft could sweeten its bid. Many analysts believe Microsoft is prepared to offer as much as $35 per share for Yahoo, which still boasts one of the Internet's largest audiences and most powerful advertising vehicles despite a prolonged slump that has hammered its stock. Yahoo's board reached the decision after exploring a wide variety of alternatives during the past week, according to the person who spoke to The Associated Press. The person didn't want to be identified because the reasons for Yahoo's rebuff won't be officially spelled out until Monday morning. Microsoft and Yahoo declined to comment Saturday on the decision, first reported by The Wall Street Journal on its Web site. Yahoo's board concluded Microsoft's offer is inadequate even though the company couldn't find any other potential bidders willing to offer a higher price. Without other suitors on the horizon, Yahoo has had little choice but to turn a cold shoulder toward Microsoft if the board hopes to fulfill its responsibility to fetch the highest price possible for the company, said technology investment banker Ken Marlin. "You would expect Yahoo's board to reject Microsoft at first," Marlin said. "If they didn't, they would be accused of malfeasance." But by spurning Microsoft, Yahoo risks further alienating shareholders already upset about management missteps that have led to five consecutive quarters of declining profits. The downturn caused Yahoo's stock price to plummet by more than 40 percent, erasing about $20 billion in shareholder wealth, in the three months leading up to Microsoft's bid. Seizing on an opportunity to expand its clout on the Internet, Microsoft dangled a takeover offer that was 62 percent above Yahoo's stock price of just $19.18 when the bid was announced Feb. 1. Yahoo shares ended the past week at $29.20. Led by company co-founder and board member Jerry Yang, Yahoo now will be under intense pressure to lay out a strategy that will prevent its stock price from collapsing again. What's more, Yang and the rest of the management team must convince Wall Street that they can boost Yahoo's market value beyond Microsoft's offer. Yahoo's shares traded at $31 as recently as November, but have eroded steadily amid concerns about the slowing economy and frustration with the slow pace of a turnaround that Yang promised last June when he replaced former movie studio mogul Terry Semel as Yahoo's chief executive officer. This isn't the first time that Yahoo has spurned Microsoft. The Redmond, Wash.-based company offered $40 per share to buy Yahoo a year ago only to be shooed away by Semel, according to a person familiar with the matter. The person didn't want to be identified because that bid was never made public. Yahoo now may want that Microsoft to raise its price to at least $40 per share again. That would force Microsoft to raise its current offer by about $12 billion -- a high price that might alarm its own shareholders. Microsoft's stock price already has slid 12 percent since the company announced its Yahoo bid, reflecting concerns about the deal bogging down amid potential management distractions, sagging employee morale and other headaches that frequently arise when two big companies are combined. Although it isn't involved directly in the deal, Google is the main reason Yahoo is being pursued by Microsoft. Yahoo has struggled largely because it hasn't been able to target online ads as effectively as Google. Microsoft believes Yahoo's brand, engineers, audience and services will provide the company with valuable weapons in its so far unsuccessful attempt to narrow Google's huge lead in the lucrative Internet search and advertising markets. As it examined ways to thwart Microsoft, Yahoo considered an advertising partnership with Google -- an alliance long favored by analysts who believe it would boost the profits of both companies. It was unclear Saturday if Yahoo's plans for boosting its stock price include a Google partnership, which would probably face antitrust issues. A Microsoft takeover of Yahoo would also be scrutinized by antitrust regulators in the United States and Europe. The antitrust uncertainties could be cited as one of the reasons that Yahoo's board decided to spurn Microsoft. Yahoo: info.yahoo.com Microsoft: microsoft.com biz.yahoo.com