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Microsoft is to attempt a boardroom coup at Yahoo! within a week in an effortto force the online search engine to start serious talks or accept its $41billion (£20.6 billion) hostile bid, The Times has learnt.
It is understood that Microsoft is preparing to nominate a “slate” ofexecutives to sit on the Yahoo! board.
Although Microsoft is not allowed to seek private understandings from itschosen executives that they would accept the software giant’s offer, inpractice the executives would recommend that Yahoo! begin serious talks oraccept the approach.
According to the rules that govern the way in which Yahoo! is set up, anyshareholder can nominate directors before the annual meeting. The deadlinefor such nominations is March 14. Should Microsoft’s nominations besuccessful, their appointment would be effective immediately.
A banking source close to Microsoft said: “We would be negligent if we were toallow this date to pass.”
While Microsoft declined to comment, it is understood that the only event thatwould stop the company from launching a coup would be if Yahoo! were tobegin formal, serious talks on the offer.
Microsoft is anxious to seize control of Yahoo! quickly because it isconcerned about the dominance of Google, its bigger internet rival.Microsoft wants to grab a bigger share of the $40 billion online advertisingmarket, which is set to double in two years.
In February last year, Yahoo! told Microsoft that it was not for sale butpromised to devise ways for the two companies to work together to fightGoogle. Yahoo! is considered by Microsoft to have broken this promise andlast month, Steve Ballmer, the chief executive of Microsoft, sent a letterto Jerry Yang, the co-founder of Yahoo!, offering $31 per share, up to halfof which would be payable in cash. The offer - at the time valued at $45billion – represented a 61 per cent premium to Yahoo!’s share price the daybefore the letter was made public.
Yahoo! has spent the month since Microsoft’s approach seeking tie-ups withother media, telecom and internet groups to protect it from the reach of thesoftware company. It has also formally rejected the approach, declaring thatthe offer seriously undervalues the group.
Yahoo! approached AOL, the internet arm of Time Warner, to see if it would beinterested in restarting merger talks, but AOL is understood not to havebeen interested. Yahoo! has also started talks with News Corporation, theparent company of The Times, over a possible joint venture that wouldinvolve merging News Corp’s MySpace social networking business into Yahoo!in return for a large shareholding. The talks are believed to be continuing.