Microsoft to Hit Yahoo! Hard with Proxy Fight

After Monday Bill Gates said that Yahoo! wasn't a must have for his company, yesterday The New York Times reported citing anonymous sources that Microsoft is quietly preparing to K.O. the Sunnyvale-based company in a proxy fight, to be authorized later this week. After attempting the polite approach (almost polite - it was an unsolicited bid after all), Microsoft is preparing the horseshoes for its gloves.

Seeing as the Yahoo! board isn't willing to give up its control over the company and surrender it on the altar of the almighty Office God, the Redmond company will seek to nominate a slate of directors to the board of the beat up animal that Yahoo! has become. The deadline for nominations is March 13th and it wants to beat it. After that will follow a campaign to oust the current board and God knows how long that will take.

It's the much cheaper and more direct approach to the issue. Said to cost somewhere between $20 and $30 million as opposed to the current $41 billion bid, it's a sure means of putting pressure on Yahoo! and to convince it that what was originally rejected as undervaluing is really a very generous offer.

All the auspices seem favorable for Microsoft, as Yahoo!'s board isn't staggered. Getting a few friendly faces in the director seats of the Internet giant alongside with those already campaigning from the inside for the takeover to be accepted is celestial manna.

Bill Gates said on Monday that his company would not raise the bid for objective reasons. Seeing its stock plummet 12.8 percent since the announcement of the takeover attempt has been made, it would cost Microsoft $1.4 for every buck added to the original offer. With the proxy fight looming, the MS Chairman's words turn into a very real threat: "They should take a hard look at it (the bid, e.n.)."