Microsoft steps up fight for Yahoo

21 February 2008 17:15 GMT / By Katie Scott

All has gone quiet on alleged talks between Google and Yahoo; the possbility of a sale to AOL; and now Rupert Murdoch has quashed rumours and said News Comm isn't interested in buying the search site; but Microsoft isn't giving up.

Despite Yahoo's best efforts to fight it off, Microsoft has opted to step up its hostile bid to buy it.

According to the BBC, Microsoft has now hired a firm that specialises in proxy battles in a move which suggests it could try to oust the current board of Yahoo directors as a way of getting what it wants.

Despite the concerns of some investors, the Yahoo board rejected a takeover offer from Microsoft worth more than $40bn (£20.6bn) saying it was too low.

Investors have since encouraged Microsoft to raise its bid but this hasn't happened.

Instead, Microsoft has insisted that its offer was "full and fair".

Instead, Microsoft, which is itself a shareholder in Yahoo, seems to want to enter into a proxy battle.

If the computing giant goes down this route, it could nominate a group of directors sympathetic to a deal for shareholders to vote on at Yahoo's annual meeting, effectively silencing the current board.

The move would be cheaper than raising its $31-a-share offer, analysts say.

Indeed, offering an extra $1 a share would cost Microsoft an additional $1.4bn, while waging a proxy fight could cost between $20m and $30m.

A report in the New York Times on Tuesday said that Microsoft could authorise its proxy battle as soon as this week to put pressure on the Yahoo board.

Microsoft would have until a 14 March deadline to put forward its own choice of directors for shareholders to approve.

Microsoft is not commenting at the moment.

Rupert Murdoch, in the meantime, has been very vocal in denying rumours that his multi-national company may enter into a race with Microsoft for Yahoo.

He told journalists categorically: "We are definitely not going to make a bid for Yahoo".

But he did hint that News Corp may be in the future saying: "We are just not interested at this stage".

Other firms named as potential rival Yahoo suitors are Time Warner, AT&T and Comcast - all of which have kept very quiet.

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Biz, Yahoo, Online, Microsoft, Websites