Microsoft is growing impatient. Two months after the company's $44.6 billion bid to take over Yahoo, Microsoft CEO Steve Ballmer has sent a letter to Yahoo's board of directors offering an ultimatum. As eWeek reports, the ultimatum stipulates that Microsoft will initiate a hostile takeover if Yahoo doesn't accept a deal within three weeks.
Ballmer's letter states tersely, "If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo board." Ballmer goes on to say that, should Microsoft attempt a hostile takeover, that course of action will also have an "undesirable impact on the value of your company from our perspective."
Yahoo formally turned down the deal in February on grounds that Microsoft was offering too little. Since then, the web company has been on hunt for an alternative suitor, but it hasn't found one with the brass to attempt outbidding Microsoft. Ballmer addresses Yahoo's search in his letter, saying that although Yahoo has been seeking alternatives, Microsoft has seen "no indication that you have authorized Yahoo management to negotiate with Microsoft." Ballmer also says the initial offer is still attractive in light of current economic conditions and Yahoo's declining "search and page view shares."
Update: Yahoo CEO Jerry Yang and Chairman Roy Bostock have responded to Ballmer with a lengthy letter. They conclude with the following:
We are open to all alternatives that maximize stockholder value. To be clear, this includes a transaction with Microsoft if it represents a price that fully recognizes the value of Yahoo! on a standalone basis and to Microsoft, is superior to our other alternatives, and provides certainty of value and certainty of closing. Lastly, we are steadfast in our commitment to choosing a path that maximizes stockholder value and we will not allow you or anyone else to acquire the company for anything less than its full value.
In the letter, Yang and Bostock also attempt to highlight Yahoo's juicy future prospects, and they say stockholders agree Microsoft's offer "substantially undervalues" their company.