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It has always been a bit of a mystery why Microsoft didn’t immediately go fully hostile on Yahoo after the first round of letters and Yahoo’s initial rejection. This would have involved a proxy contest and an exchange offer.
Many explained it as Microsoft simply biding its time, trying to fight off its old Borg/Darth Vader image, and thus preferring not to be seen as too aggressive in its actions to acquire Yahoo. Part of Yahoo’s value lies with its people after all – and if you still believe that this is even more true for tech companies, then it explains Microsoft’s go-slow strategy.
I’ve always thought that the problem with this strategy Microsoft has adopted thus far — slow and easy — is that it missed a maneuver from Larry Ellison’s tried-and-true playbook. In Larry’s world, you launch your full hostile as soon as possible in order to begin the time-clock running on your required antitrust regulatory clearances. Thus, when the target (Peoplesoft, etc.) finally agrees to negotiate provided you raise your bid, you don’t have to worry about closing risk. By that time, you’ve already obtained the necessary antitrust and other regulatory clearances. You put a few more dollars on the table and close in the next few weeks.
Douglas Phillabaum
