Yahoo! Formally Says ‘Nyet’

From the press release (courtesy Gary Price):

After careful evaluation, the Board believes that Microsoft’s proposal substantially undervalues Yahoo! including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments. The Board of Directors is continually evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximize value for all stockholders.

And, as many of you have already discovered, there are “merger” discussions apparently underway between AOL and Yahoo! There’s a good deal more discussion at Techmeme. The tone of most of the posts is one of skepticism or derision. There’s considerable overlap in services and there would be comparable integration challenges in a Yahoo!-AOL merger but there may be some stars aligned here:

1. TWX wants to do something with AOL and is splitting the company in two for possible sale or spin-off, so the timing is right on this side of the equation
2. Yahoo! would be an equal player in a merger scenario and not simply swallowed up by a larger entity, which is more appealing for Yahoo!
3. The internal perception undoubtedly is that the “cultural” fit is somewhat better, in part because of #2

I hadn’t seen a potential merger (rumor right now) with AOL coming and it wouldn’t have been considered, frankly, absent the Microsoft bid. So that suggests that it might not make tremendous sense in the abstract.

The next move is Microsoft’s.

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