Perception & Interpretation

“Microsoft isn't happy with Yahoo's decision to spurn its $44.6 billion takeover bid, but the software maker is going to let Yahoo! live with the consequences a while before applying added pressure.

“Microsoft said as much, however politely, on Feb. 11 when it called the offer, extended on Jan. 31, ‘full and fair.’ The remarks came in response to Yahoo's earlier statement that Microsoft's bid ‘substantially undervalues’ the company. The interchange is part of a delicate dance that, while cordial now, could soon turn hostile. ‘The process is following a reasonably well-known mating ritual,’ says Joseph Grundfest, a Stanford Law School professor and former commissioner of the Securities & Exchange Commission.

“To understand the process, it's important to parse each company's statement for what has been said and, just as important, what hasn't. For example, Yahoo's statements suggest there is a price that fairly values the company and ostensibly would be acceptable. Microsoft just hasn't hit that number yet.

“Importantly, Yahoo says it's the company's board that believes Microsoft's bid undervalues it. The company didn't say bankers or legal advisers feel that way. It leaves open the question whether the bankers at Goldman Sachs, Lehman Brothers, and Moelis & Co., which are advising Yahoo, concur. The same goes for Yahoo's attorneys at Skadden, Arps, Slate, Meagher & Flom.

“What's more, nowhere in Yahoo's release does the company describe Microsoft's offer as ‘inadequate.’ That's a key word, loaded with legal meaning that in mergers-and-acquisitions-speak could torpedo the deal. Instead, the company said only that ‘the proposal is not in the best interests of Yahoo and our stockholders.’

“There's even a line in the Yahoo statement that could suggest the company is ready to sell if Microsoft ups the ante. Yahoo says the board remains ‘committed to pursuing initiatives that maximize value for all stockholders.’ That could be an invitation to increase the offer, something many analysts expect Microsoft to eventually do.”

(“The Microsoft-Yahoo! Mating Dance; Understanding the ins and outs of the brewing takeover battle requires parsing what each company said -- and what each didn't.” Jay Greene. BusinessWeek.com. February 13, 2008)

AMBIGUITY may be the seedbed of communication and forward movement.

Barren straight-talk may end it all right there.

It depends -- how do you see it from your perspective?