NASDAQ: YHOO10.74   0 (0%)  

The Internet media giant Yahoo! is expected to reject Microsoft’s offer, initially worth $44.6 billion, on this Monday. Yahoo’s board believes the Microsoft offer massively undervalues Yahoo. The source confirmed an earlier Wall Street Journal report that Microsoft’s is trying to take advantage of the recent weakness in the company’s share price to ’steal’ the company.
Microsoft has proposed an acquisition of Yahoo! for $31 per share or at apporximately $44.6 billon in cash and stock. Microsoft has offered a 62 percent premium to current trading price for Yahoo! shareholders on their shares to sell the company. Microsoft believes by acquiring Yahoo they can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market.

However analysts are uncertain whether Microsoft would be up to paying the higher price per share, which would raise its bid for $35 per share or raise its bid by about $12 million. Alternatively, Microsoft can buy Yahoo’s shares for $31 per share from Yahoo shareholders directly. It also may still be open to a longer negotiation with Microsoft. The report said it was told by the source that Yahoo would be unlikely to consider any offers below $40 per share.

Microsoft representatives over the weekend said they would wait until receiving the expected letter from Yahoo’s board before responding. Yahoo’s board intends to send Microsoft a letter on Monday, detailing its position.