Microsoft and Steve Ballmer already know these, but Marc Andreessen summarized the choices available to the company in their quest to absorb Yahoo.
Andreessen’s lengthy post, a discussion with high powered corporate attorneys, is well worth the time for any Internet industry observer. Here’s the essence of the choices available to Microsoft:
The possible scenarios from here, in roughly decreasing order of probability, include:
Hostile Takeover: Microsoft moves forward with a full-fledged hostile takeover — trying to replace Yahoo’s board and/or taking its offer directly to Yahoo’s shareholders.
Higher Offer: Microsoft raises its offer or otherwise modifies its offer terms to make them more attractive — for example, Microsoft could shift to an all-cash offer — in an attempt to make the deal happen without going fully hostile.
Walk Away: Microsoft drops its offer and walks away; Yahoo’s stock drops to its pre-offer level of $19.18, give or take. Lots of moves and countermoves could follow: Microsoft could come back later with a lower or higher offer; Yahoo could cut a Google advertising deal to boost its revenue and margins and make itself harder to buy; Microsoft could take its $44 billion and go buy virtually every new Internet company of any consequence founded in the last 10 years; etc.
Yahoo Caves: Yahoo’s board caves and accepts the current Microsoft offer.
White Knight: Another bidder enters and offers Yahoo a higher price.
Andreessen’s walk away idea intrigues us the most. Imagine the possible scenario to emerge if Microsoft suddenly adopted some type of you build it, we buy it, strategy. Entrepreneurs with a clever idea and the ability get it up and running would race to build a service, outdraw similar new competitors, and attract Microsoft’s checkbook. Only the best win, with the runners-up receiving a set of steak knives for second place. Cash is for closers.
