Microsoft opens window for proxy fight at Yahoo

20 February 2008

The attempted takeover of Yahoo appears to have taken another turn, with reports that Microsoft is preparing for a 'proxy fight' to secure the company.

Last week Yahoo rejected an offer from Microsoft that was worth $44.6 billion, saying that the bid "substantially undervalues" the company.

Now the New York Times' DealBook blog reports that Microsoft will seek to nominate a number of new directors to Yahoo's board before mid-March, unless Yahoo enters into talks.

Analysts have pointed out that the fact that all members of Yahoo's board are up for simultaneous re-nomination, rather than in staggered groups, makes the company vulnerable to such a move.

It is thought that the proposed action would cost $20-30 million pounds, substantially less that the billions it would cost Microsoft to raise its offer to a level Yahoo has indicated would be acceptable.

However, there is widespread speculation that Microsoft's mooted proxy fight is unlikely come to anything.

"I'll believe it when I see it," comments financial journalist Jonathan Berr at BloggingStocks. "Investors need to remember that the media loves to hype potential battles like proxy battles even if the chances of them actually [happening] are quite remote."

Category: MSN, Search engines, Yahoo