Yahoo has means to spurn Microsoft
Sunday, February 3, 2008
YAHOO Inc has some defence at its disposal should Microsoft Corp's unsolicited US$44.6 billion ($63.1 billion) bid turn hostile, as the Internet company adopted a poison pill in 2001.
Poison pills are defense mechanisms firms put in place to fend off unwanted takeovers, typically working by giving shareholders the ability to buy stock at a bargain price in the event a predator buys a stake above a certain level. That raises the number of shares of the target, diluting the percentage stake the predator holds and making a bid very expensive.
In 2001, Yahoo adopted a "stockholder rights plan" under which if anyone buys 15 per cent or more of its stock aside from an agreed bid shareholders have the right to buy extra shares, according to a filing at the time. "Because the rights may substantially dilute the stock ownership of a person or group attempting to take us over without the approval of our Board of Directors, our rights plan could make it more difficult for a third party to acquire us (or a significant percentage of our outstanding capital stock) without first negotiating with our Board of Directors regarding that acquisition," according to a 2007 Yahoo filing.
Microsoft offered Yahoo US$31 a share, a 62 per cent premium above the closing price on Thursday. Reuters
Poison pills are defense mechanisms firms put in place to fend off unwanted takeovers, typically working by giving shareholders the ability to buy stock at a bargain price in the event a predator buys a stake above a certain level. That raises the number of shares of the target, diluting the percentage stake the predator holds and making a bid very expensive.
In 2001, Yahoo adopted a "stockholder rights plan" under which if anyone buys 15 per cent or more of its stock aside from an agreed bid shareholders have the right to buy extra shares, according to a filing at the time. "Because the rights may substantially dilute the stock ownership of a person or group attempting to take us over without the approval of our Board of Directors, our rights plan could make it more difficult for a third party to acquire us (or a significant percentage of our outstanding capital stock) without first negotiating with our Board of Directors regarding that acquisition," according to a 2007 Yahoo filing.
Microsoft offered Yahoo US$31 a share, a 62 per cent premium above the closing price on Thursday. Reuters
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