Full Version: Hostile Takeovers
http://www.msnbc.msn.com/id/23237868/
Just reading this story made me a little irritated to say the least. Apparently, the Board of Directors for the Yahoo Corporation do not wish to sell their company to anybody. But Microsoft wants to buy out Yahoo against the wishes of the Yahoo company. This raises an interesting question. Let's say you own some property or some items, and then some rich person or company approaches you and asks you to sell your property or items. As the owner, I presume that you would have the right to decline the offer and hold on to your property, even if the rich person is willing to pay more than the market value of your property. For example, if I were to own a small house and want to live in that house, no rich person could approach me and force me to sell my house, even if the rich person offered $1 million or even $10 million for it.
So the question for debate is,
Should large Corporations have the right to force smaller Corporations to be bought out by the bigger Corporation?
Just reading this story made me a little irritated to say the least. Apparently, the Board of Directors for the Yahoo Corporation do not wish to sell their company to anybody. But Microsoft wants to buy out Yahoo against the wishes of the Yahoo company. This raises an interesting question. Let's say you own some property or some items, and then some rich person or company approaches you and asks you to sell your property or items. As the owner, I presume that you would have the right to decline the offer and hold on to your property, even if the rich person is willing to pay more than the market value of your property. For example, if I were to own a small house and want to live in that house, no rich person could approach me and force me to sell my house, even if the rich person offered $1 million or even $10 million for it.
So the question for debate is,
Should large Corporations have the right to force smaller Corporations to be bought out by the bigger Corporation?
For reference:
Proxy Fight
Microsoft is really playing this one smart. Offering the carrot has led to thousands of new speculators, eager for a Microsoft buyout, who have bought Yahoo! shares in anticipation of a merger. If MSFT were to engage in a proxy fight, their maneuvering will have given them a myriad of allies to force the deal. Genius.
Skeeterses, remember, Yahoo is a publicly traded company. The owners (shareholders) are in fact given the right to accept/reject the deal without the approval of the board members.
QUOTE(Proxy Fight)
When a group of shareholders are persuaded to join forces and gather enough shareholder proxies to win a corporate vote. This is referred to also as a proxy battle.
This term is used mainly in the context of takeovers. The acquirer will persuade existing shareholders to vote out company management so that the company will be easier to takeover.
This term is used mainly in the context of takeovers. The acquirer will persuade existing shareholders to vote out company management so that the company will be easier to takeover.
Proxy Fight
Microsoft is really playing this one smart. Offering the carrot has led to thousands of new speculators, eager for a Microsoft buyout, who have bought Yahoo! shares in anticipation of a merger. If MSFT were to engage in a proxy fight, their maneuvering will have given them a myriad of allies to force the deal. Genius.
Skeeterses, remember, Yahoo is a publicly traded company. The owners (shareholders) are in fact given the right to accept/reject the deal without the approval of the board members.
Should large Corporations have the right to force smaller Corporations to be bought out by the bigger Corporation?
Force? I don't see any way that MicroSoft is attempting to "force" Yahoo to do anything. They made an offer to buy them out, that's the first step - a "friendly merger". Yahoo refused the offer, okay. Now, MicroSoft has several courses of action from which to choose. They can sweeten the offer by offering more money per share which continues down the merger road, or they an turn it into a "hostile takeover" (the title of this thread) by taking it directly to the owners (stockholders) of Yahoo. If they choose this course of action, they have to notify both Yahoo and the SEC of their intentions. It then depends on how many shares of Yahoo stock are out there available for public trading. If there are 50%+ of the total shares, then MicroSoft has a shot at buying the company. If not, then they take another course of action and drop the whole deal. But, they haven't "forced" Yahoo to do anything.
Aquilla
Force? I don't see any way that MicroSoft is attempting to "force" Yahoo to do anything. They made an offer to buy them out, that's the first step - a "friendly merger". Yahoo refused the offer, okay. Now, MicroSoft has several courses of action from which to choose. They can sweeten the offer by offering more money per share which continues down the merger road, or they an turn it into a "hostile takeover" (the title of this thread) by taking it directly to the owners (stockholders) of Yahoo. If they choose this course of action, they have to notify both Yahoo and the SEC of their intentions. It then depends on how many shares of Yahoo stock are out there available for public trading. If there are 50%+ of the total shares, then MicroSoft has a shot at buying the company. If not, then they take another course of action and drop the whole deal. But, they haven't "forced" Yahoo to do anything.
Aquilla
Just quickly checking Yahoo! last 10Q:
10Q
Out of the 3 million shares outstanding, Yahoo! only has 3 hundred thousand shares of treasury stock. Assuming the board directors cannot make up the other 40%, it looks like Microsoft will have more than enough wiggle room to pull it off.
QUOTE(Balance sheet)
Common stock, $0.001 par value; 5,000,000 shares authorized; 1,497,912 and 1,525,277 shares issued, respectively, and 1,360,247 and 1,330,063 shares outstanding, respectively
Treasury stock at cost, 137,665 and 195,214 shares, respectively
Treasury stock at cost, 137,665 and 195,214 shares, respectively
10Q
Out of the 3 million shares outstanding, Yahoo! only has 3 hundred thousand shares of treasury stock. Assuming the board directors cannot make up the other 40%, it looks like Microsoft will have more than enough wiggle room to pull it off.
QUOTE(BecomingHuman @ Feb 19 2008, 08:25 PM) 
Just quickly checking Yahoo! last 10Q:
10Q
Out of the 3 million shares outstanding, Yahoo! only has 3 hundred thousand shares of treasury stock. Assuming the board directors cannot make up the other 40%, it looks like Microsoft will have more than enough wiggle room to pull it off.
QUOTE(Balance sheet)
Common stock, $0.001 par value; 5,000,000 shares authorized; 1,497,912 and 1,525,277 shares issued, respectively, and 1,360,247 and 1,330,063 shares outstanding, respectively
Treasury stock at cost, 137,665 and 195,214 shares, respectively
Treasury stock at cost, 137,665 and 195,214 shares, respectively
10Q
Out of the 3 million shares outstanding, Yahoo! only has 3 hundred thousand shares of treasury stock. Assuming the board directors cannot make up the other 40%, it looks like Microsoft will have more than enough wiggle room to pull it off.
Wow! I haven't read the entire report so I don't know if there's something hidden in there, but if Yahoo is that far leveraged, no wonder MicroSoft made the tender offer. I'll have to read through your cited report further, BH, I may need to call my broker tomorrow.
Aquilla
QUOTE(skeeterses @ Feb 19 2008, 10:44 PM)
Should large Corporations have the right to force smaller Corporations to be bought out by the bigger Corporation?
To quote one of my favorite movie "villians," the answer is: "It's just good business."
From the viewpoint of the consumer, it may stink, but when you're the producer and you want to maximize production, increase operating capital, and lower wages and secure lower rents and decrease deadweight loss, it helps.
And in our American system where capitalism is the law of Businessland, there's nothing illegal about it since it happens often enough. We have a whole branch of law devoted to hostile takeovers. I always make the argument that business is a nation without borders because it operates much like a nation. So using that to say all's fair [as all's fair in love and war] when pitting business against business, it's inevitable that some will thrive while others die. That too is just survival of the fittest. Doesn't mean the consumer has to like it.
QUOTE(skeeterses @ Feb 19 2008, 10:44 PM)
http://www.msnbc.msn.com/id/23237868/
Just reading this story made me a little irritated to say the least. Apparently, the Board of Directors for the Yahoo Corporation do not wish to sell their company to anybody. But Microsoft wants to buy out Yahoo against the wishes of the Yahoo company. This raises an interesting question. Let's say you own some property or some items, and then some rich person or company approaches you and asks you to sell your property or items. As the owner, I presume that you would have the right to decline the offer and hold on to your property, even if the rich person is willing to pay more than the market value of your property. For example, if I were to own a small house and want to live in that house, no rich person could approach me and force me to sell my house, even if the rich person offered $1 million or even $10 million for it.
So the question for debate is,
Should large Corporations have the right to force smaller Corporations to be bought out by the bigger Corporation?
Just reading this story made me a little irritated to say the least. Apparently, the Board of Directors for the Yahoo Corporation do not wish to sell their company to anybody. But Microsoft wants to buy out Yahoo against the wishes of the Yahoo company. This raises an interesting question. Let's say you own some property or some items, and then some rich person or company approaches you and asks you to sell your property or items. As the owner, I presume that you would have the right to decline the offer and hold on to your property, even if the rich person is willing to pay more than the market value of your property. For example, if I were to own a small house and want to live in that house, no rich person could approach me and force me to sell my house, even if the rich person offered $1 million or even $10 million for it.
So the question for debate is,
Should large Corporations have the right to force smaller Corporations to be bought out by the bigger Corporation?
The problem is that your analogy doesn't fit what is going on. Microsoft can't force the owners to sell, but the owners can sell against the wishes of management. The board of directors are elected by the stockholders to hire management to run the company. Since in this case, neither management nor the board of directors actually owns more than 50% of the company, being bought out against their wishes isn't a question of an owner being forced to sell. If the Yahoo shareholders don't want to sell their shares to Microsoft, they don't have to. The only people that are really being forced to do anything is management, but they don't actually own anything, they are merely employees of the shareholders.
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