Gates urges Yahoo to reconsider bid

Bill Gates believes Microsoft’s bid for Yahoo is “very fair” and has urged the company to re-think its rejection of the $44 billion deal.

Microsoft’s offer for Yahoo represented a 62% premium on the company’s value at the time of the bid, but Yahoo rejected the offer claiming it undervalued the company.

Gates says that Microsoft is not currently negotiating a further offer with Yahoo, although many analysts believe that the company would agree to a slightly higher bid. However, Gates suggests that Microsoft was ready to invest heavily in web search, even if it failed to complete the takeover.

“We can afford to make big investments in the engineering and marketing that needs to get done. We will do that with or without Yahoo,” says Gates, who still remains the largest shareholder in Microsoft.

“But we also see that we’d get there faster if the great engineering work that Yahoo has done and the great engineers there were part of the common effort.”

Some analysts have suggested that Yahoo could face legal action from its shareholders for delaying a deal, or accepting a less competitive offer from another company.

“Doing some alternative deal is almost sure to be of less value to shareholders,” says Clayton Moran, an analyst with the Stanford Group in Houston. “You would see all sorts of lawsuits – and they would be lawsuits with merit.”