Yahoo wants more from Microsoft
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KAI RYSSDAL: The Federal Reserve reported this afternoon consumers are being a bit more leery in their borrowing habits. What’s called “consumer credit,” essentially everything except home loans, slowed in February to less than half its growth rate in January. Yes, that does mean we’re still borrowing, but way less than anybody thought.
Back to the merger market, the other deal news this Monday was of a deal not yet done. Microsoft’s bid to takeover Yahoo is still in play. It’s just getting nastier. The software company set its first deadline over the weekend. Three weeks, Microsoft said, or it’s going to skip right past Yahoo management and go straight to shareholders. Today, Yahoo fired back. CEO Jerry Yang said it’s not that Yahoo’s necessarily opposed to working things out. It’s just that the company would like more money first.
Marketplace’s Sam Eaton reports.
SAM EATON: When the stakes are that high, business leaders rarely refer to each other by first name in official documents, but that’s exactly what Yahoo executives did today, in a letter that at one point addressed Microsoft CEO Steve Ballmer by his first name. Technology analyst Rob Enderle says it takes the exchange to a new level.
ROB ENDERLE: It’s becoming personal. It’s becoming a battle between the two executive teams as to what the value of Yahoo is. This kind of thing typically does not end well.
Despite the tough rhetoric, Yahoo says it’s still open to a deal as long as the price is right. The trouble is Microsoft’s own value has sunk in the two months since its initial offer. That offer included both cash and Microsoft stock. Still, the overall offer is higher than Yahoo’s current worth, and if Microsoft decides on a hostile takeover, it will likely be for even less. Stanford University business professor Haim Mendelson says that’s a scenario the software giant hopes to avoid.
HAIM MENDELSON: Even in a friendly merger we’re talking about companies with very different cultures, very different approaches to doing business. It’s obviously going to be more difficult and more costly if they go through a proxy fight as well.
Mendelson says Microsoft isn’t likely to walk away, since it sees the acquisition as key to competing with Google, but he says the uglier the battle becomes, the lower the chances for success. Mendelson says in the end, everyone still has to make up and live together under the same roof.
In Los Angeles, I’m Sam Eaton for Marketplace.
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