1. Background of the Company
Microsoft is one of the biggest software and IT companies in the world. The industry touches every region of Technology. Its current best-selling products are the Microsoft Windows operating system and the Microsoft Office suite of productivity software. They cover Operation System (Vista and Windows 7), Server and Tools Division (Windows server 2008, VB and SQL), Online Services Business division (MSN and the search engine Bing), Microsoft Business Division (Microsoft Office), and Entertainment Devices Division (smart phones, XBOX and MSN TV). Microsoft mission is to enable people and businesses throughout the world to realize their full potential. It develops software,…show more content… A hostile takeover can be accomplished through either a tender offer or a proxy fight.
The key characteristic of a hostile takeover is that the target company's management does not want the deal to go through. Sometimes a company's management will defend against unwanted hostile takeovers by using several controversial strategies including the poison pill, crown-jewel defense, golden parachute, Pac-man defense, and others.
3. Case Questions
3.1 Did Yahoo’s management and board act in the best interest of shareholders when rejecting Microsoft’s takeover offer?
Yahoo! announced that its board of directors had adopted a shareholder-rights plan, which it described as “to prevent an acquirer from gaining control of Yahoo! without offering a fair and adequate price and terms to all of Yahoo!’s stockholders.” In other words, the directors were doing it to protect their owners. But the next day, Yahoo! stock fell 11 percent. Why would stockholders react so adversely to something called a “shareholder-rights plan?” Why would they dislike getting extra rights for free? The more common term for such plans, “poison pills,” points us to the reason.
Similar to many other shareholder-rights plans, Yahoo!’s plan essentially gives existing shareholders the right to purchase additional shares of the