Yahoo! and AOL are restarting merger talks as a means of defending itself against the $45 billion (£23 billion) hostile bid approach from Microsoft. It is understood that Yahoo! and its team of advisers from Goldman Sachs and Lehman Brothers, the US investment banks, have spent the past week evaluating possible tie-ups with media and technology firms that would save it from being swallowed by Microsoft.
Yahoo! and AOL previously failed to join forces because of differences over price. It is however hoped that the urgency created by an unwelcome approach from Microsoft and an impending economic downturn will spur the two into new talks. Google, which offered support to Yahoo! when the Microsoft approach was made public, also has a 5% stake in AOL.
Jerry Yang, co-founder of Yahoo!, will today tell Wall Street that his board has rejected the software giant’s cash-and-shares proposal because it significantly undervalues the company. It is believed that the Yahoo! board will not even consider starting talks with Microsoft unless the suitor group offers at least $12 billion (£6 billion) more, representing a share price value of more than $40 (£20).
Currently, Microsoft has proposed paying $31 (£15) in cash and shares, valuing Yahoo! at just under $45 billion (£23 billion). Microsoft had proposed to pay Yahoo! shareholders up to half in cash and the rest with Microsoft shares.
Yahoo! has suffered eight consecutive quarters of profit decline. Critically, it has also lost part of its share of the $40 billion (£20 billion) online advertising market to Google, its dominant rival. Microsoft is desperate to take over Yahoo! because of the threat that Google’s dominance of the online search advertising market poses to the computer company’s future. Last year, after long discussions about a merger between the two, Yahoo! declared that it was not for sale. However, it did agree to draw up proposals about how the two could co-operate to fight Google more effectively. (source: Timesonline)
Under the new Open Skies regime that throws transatlantic routes open to full competition for the first time from the end of March, a raft of airlines have unveiled plans for new Heathrow services. According to aviation industry sources, all but US Airways have signed deals with companies to refuel their planes at the world's busiest airport. This is because of BBAs inability to secure fuel supplies for a new service it plans to launch next month from the world’s busiest airport and is threatening to launch legal action against BAA.
A US Airways spokesman said: "We are working every possible angle to acquire fuel at Heathrow and have been ever since we announced our start-up last November. This situation continues despite the fact that the BAA and [airlines trade body] IATA have brokered a deal among all of the airlines to allocate fuel among themselves to ensure everyone, including the new entrants to the market, have adequate fuel."
BAA has appealed to several other airlines to make some of their supplies available to US Airways. None has agreed to do so. A source at one rival airline said: "They spoke to us about it but of course we said no. They are competitors. No one has been willing to take them on."
A BAA spokeswoman said: "We are confident there will be sufficient fuel, and we have contingency plans in place." (source: The Independent)