Today, Yahoo’s board rejected Microsoft’s offer stating the bid is too low and undervalues the company.   Yahoo believes their company is worth close to $40 / share.  If we compare this situation to the Oracle buyout of BEA Systems, then it is likely Yahoo is holding out for a better offer from Microsoft.

Microsoft then issued a response calling the rejection “unfortunate”.   What are the next steps for Microsoft?  First, Microsoft could increase their bid.  However, this is unlikely since it would give Yahoo the negotiating edge in this transaction.  Instead, the likely response is for Microsoft to hold firm on its bid and take it straight to the shareholders who can then exert pressure on Yahoo executives and the board.

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