Yahoo plans to say no to Microsoft but yes to… AOL?

And the saga continues: After a week of speculations, we thought we’ve heard everything. It started with Microsoft’s bid. Then rumors said that a PE firm will come to the rescue. Google couldn’t just be a bystander and added oil to the fire by offering Yahoo a sweet advertising deal and a larger piece of the growing pie. On Saturday Feb 9th, the New York Times reported that a a person familiar with the matter told the newspaper that “Yahoo’s board plans to reject Microsoft’s $44.6 billion hostile bid with a letter Monday saying the offer undervalues the company”. The way the London Times described it, Yahoo felt as if Microsoft is trying to get a bargain:  

“All they [Microsoft] are trying to do is pick off the company on the cheap. They’re trying to steal it. And the board is not going to let that happen. They have gone for a valuation that reflects the five-year low of the stock.”The source added: “It would have to be in the 40s to start talking, and we would have to get over regulatory issues. It would have to be an offer that would give Jerry Yang something to stand on a podium and smile about.”  

 Accordingly, AP released the dramatic headline: “Yahoo Board Mulls Microsoft Bid“. Yahoo wanted more than the $31 per share offered by Microsoft – at that point it became a question of who and when, not if anymore. The WSJ reported that another unnamed source told the Journal that “the company [Yahoo] is unlikely to accept a bid below $40 per share, which would value the company 29 percent higher than the original offer.” But the story is far from over. In the last couple of hours there have been several reports that Yahoo is considering renewing its negotiatons with AOL, discussing a potential merger. Such merger would only happen after the changes AOL is going through – it is being split to two companies by Time Warner: Internet access and Content and Advestising.  Jerry Yang is going to have a hard time convincing the share holders that it’s a better offer than the $44 billion that Microsoft is putting on the table. Finally, the guy that tough us how to raise money from VCs, adds some advice on deal negotiations for the captains of Yahoo. Really funny, watch it below.(if you can’t see the player see the video here How to Negotiate – Tips for Yahoo! )

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Eze Vidra

General Partner, Google Ventures at Google
Eze is a General Partner at Google Ventures Europe. Before joining GV, Eze started Campus London, Google's first physical hub for startups, and led Google for Entrepreneurs in Europe. He's an experienced product manager and startup mentor. In 2012 Eze founded Techbikers, a non-for profit supporting children education in developing countries.
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Eze Vidra

Eze is a General Partner at Google Ventures Europe. Before joining GV, Eze started Campus London, Google's first physical hub for startups, and led Google for Entrepreneurs in Europe. He's an experienced product manager and startup mentor. In 2012 Eze founded Techbikers, a non-for profit supporting children education in developing countries.

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