Microsoft threatens Yahoo, may consider Google alliance

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The Times is reporting that Microsoft is threatening to launch a boardroom coup at Yahoo within six weeks if it does not accept the $44.6 billion takeover proposal or start any serious talks.

The plans to oust the executives came as Yahoo was considering partnering with Google to stay independent and fight off the approach of Microsoft, which saw a blogging match between both companies – with Google accusing Microsoft of seeking to extend its monopoly in the computer software market.

Microsoft responded that the merger would create a “compelling number two competitor for Internet search and online advertising” to the current leader – Google.

“The alternative scenarios only lead to less competition on the Internet,” said Brad Smith, Microsoft’s General Counsel, in a statement.

Microsoft is believed to be confident that the deal will be backed by other shareholders because of the size of its premium and since Yahoo currently have suffered falling profits and a shrinking market share. As well, the software company is prepared to use its right as a shareholder to nominate its own executives to the board and will force the company to accept the propsal.

Under Yahoo’s bylaws, any shareholder has the right to nominate executives to be voted on by all shareholders. The current deadline for the year is March 13.

As well, according to the Times, a source close to Google was considering preparing a couterbid for Yahoo. Also, it is understood that Google executives have been calling colleagues at media companies, like Time Warner, to discuss if they are planning to rival the Microsoft bid. Currently, there are none.

Some analysts are also speculating that Yahoo may consider any merger with other media companies, such as News Corporation and Disney, or a telecom group, like AT&T.

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