According to a report in the Wall Street Journal this evening, Yahoo’s board has decided to reject Microsoft’s acquisition bid, stating that the offer of $31 per share “massively undervalues” the company. Of course, the offer was 62% more than the market’s valuation of Yahoo, so either Yahoo’s board knows something the rest of the world doesn’t or this is wishful thinking.
While this could be an attempt to force Microsoft to juice up the offer, I don’t think it is. I suspect Yahoo truly believes it can go it alone and turn around the company (with, perhaps, some help from newly found friends like Google). Although, one might wonder, if Yahoo’s management has the ability to create greater value from the company’s assets, why hasn’t it done so already?
But fear and loathing of Microsoft can be a powerful motivator. It will certainly help to spur the troops and address the “demoralized work force” issue referenced in my earlier post this morning. But it’s hard to imagine that this is enough to cure Yahoo’s deeply entrenched problems.