Yahoo! Inc, responding to Microsoft Corp's weekend threat of a proxy fight that could result in a lower takeover price, said the current $44.6 billion offer must be raised before any merger can take place.

"We will not allow you or anyone else to acquire the company for anything less than its full value," Yahoo said yesterday in a letter to Microsoft Chief Executive Officer Steve Ballmer. On Saturday, Ballmer gave Yahoo three weeks to reach a deal or face a proxy battle.

Yahoo, owner of the most visited US website, said it isn't against a combination with Microsoft at a superior price and rejected Ballmer's charge that its business has deteriorated. Yahoo called Microsoft's threat "counterproductive" and is still evaluating alternatives to the bid, which was 62 percent higher than its stock price at the time of the offer.

"We are open to all alternatives that maximize stockholder value," CEO Jerry Yang and Chairman Roy Bostock wrote. "This includes a transaction with Microsoft if it represents a price that fully recognizes the value of Yahoo on a standalone basis."

Yahoo, based in Sunnyvale, California, fell 66 cents to $27.70 in early trading after closing at $28.36 on the NASDAQ Stock Market on Friday.

Microsoft, the world's biggest software company, made the $31-a-share offer on Jan 31. Its shares have fallen since the bid, closing last week at $29.16, valuing the half-cash, half- stock bid at about $29.36 a share.

Microsoft spokeswoman Dawn Beauparlant didn't immediately return a telephone call seeking comment.

Cat and mouse

Ballmer's ultimatum shows Microsoft is in a hurry to secure Yahoo to take on Google Inc, which dominates in Internet search, said analysts including Canaccord Adams' Colin Gillis.

"Microsoft doesn't want to spend a year negotiating, playing cat and mouse with the Yahoo board and another year to close this transaction to get all the regulatory approvals," said New York-based Gillis, who advises investors to buy Yahoo stock. "The Yahoo board should come to the table a little more forthrightly."

Combining with Yahoo would allow Redmond, Washington-based Microsoft to unite the second- and third-most popular search engines in the United States.

That would let them take on Google, which gets more than half the Internet queries in the country.

Google's purchase of DoubleClick Inc, whose software helps create and measure the effectiveness of Internet ads, also may have forced Microsoft to accelerate its plans since the deal gave its rival a bigger share of the display ad market, Gillis said. Microsoft and Yahoo both trail the Mountain View, California-based company in Internet advertising sales.

Yahoo rejected the bid on Feb 11, saying the price didn't reflect its value.

Agencies

(China Daily 04/08/2008 page17)