Pr. Dr.

Truong Thi NamThang

MicroHoo !
Dr. Truong Thi Nam Thang

Translated from “Các tình huống quản trị công ty”, 2013

February 1, 2008, Microsoft conducted a tender offer to acquire Yahoo. Microsoft's goal is to harness
the Yahoo search engine and online advertising sources, helping Microsoft compete more effectively
with Google. Microsoft offered to pay U.S. $ 44.6 billion , with a per share price is 31 USD , which means
higher prices Yahoo's closing price the previous day was 62%. As a result, Yahoo's stock price soared.

Between February 2008, Yahoo formally rejected Microsoft's proposal, claiming Microsoft undervalued
Yahoo's stock price, Yahoo's stock price is the minimum requirement is 40 USD / share. Under the
leadership of Jerry Yang, co-founder and chief executive of Yahoo, the company issued a compensation
plan "poison pill" is quite controversial. The company began looking for an investor "for white knights".

Along with the decline in the stock price of Microsoft and Yahoo shareholder of creating greater
pressure on the board, Microsoft increased its offer to purchase for $ 33 USD / share. However, Yahoo's
board has rejected the proposal and insists on not less than 37 USD / share.

May 3, 2008, Microsoft announced withdrawal from the bidding to buy Yahoo. On the same day,
Yahoo's stock price down to 23 dollars, and continue to fall to below 20 dollars in the following months .
Next, a group of shareholders to conduct a lawsuit against Yahoo's board.

June 3, 2008 , activist shareholder Carl Icahn to conduct a series of lawsuits that Yang has too deeply
hostile to Microsoft , is " defensive behavior and is only interested in the body " of Yang destroyed
transactions with Microsoft .

Microsoft CEO Steve Ballmer said that Microsoft and Yahoo merger as an opportunity to strengthen
Microsoft 's position in the online advertising market , currently dominated by Google . " Microhoo " will
be able to achieve 86 % of Internet users in the U.S. and 59 % control of online advertising market .

In a letter Ballmer sent to Yahoo's board ( the end of the case ) emphasizes the benefits expected from
the merger , including economies of scale , expand research and development , performance , increase
user's experience . Thanks to the merger , Microsoft can leverage Yahoo 's technology , cut some capital-
intensive projects , can save up to $ 1 billion / year .

Many Microsoft shareholders are not really satisfied with the intention of diversifying activities through
participation in the online advertising market of Yahoo . The fight with Yahoo also affect Microsoft , the
company's stock price fell significantly in 6 months after Yahoo takeover proposal , from $ 30.45 / share
to 26 USD / share.

Although the benefits of the merger is pretty clear, plus shareholders psychological pressure , team CEO
of Yahoo is quite strong resistance to Microsoft's invitation. After buying Microsoft shares rise to 33 USD
/ share, CEO Yang still require minimum price is 37 USD , this price is considered too high. Despite the
time Yahoo's stock price rises to $ 33.63, but $ 37 is higher than 93 % over the closing price of Yahoo at
the time of January 31, 2008 is 19.18 USD. Executive board continuously compensation plan is quite
controversial, as well as to pursue third parties such as Google and AOL with the goal of ending the
ability of Microsoft takeover.

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Pr. Dr. Truong Thi NamThang

CEO of Yahoo offers many different difficulties to safeguard Microsoft's bid as the legal barriers, cost
issues and strategies underestimated the value of Yahoo , the ability loss of human resources and affect
the psychology of employees .

Microsoft 's original bid was half in cash and half in shares . Meanwhile , Microsoft 's stock price
dropped when Yahoo announced tender offer , thus resulting in reduced value of the deal . Yahoo said
that the vigilance must be acquired by a larger company and does not have appropriate expertise .
Yahoo CEO said that a merger will have a large number of mobile workers were cut , as will merge parts .
Director Yang also offers personal reasons and emotions as a visionary in the world of Internet , the
dedication to the company.

With business operations of Yahoo ineffective in recent times , many shareholders that Microsoft's offer
is the best way to withdraw their investments , and that the board of directors of Yahoo repeatedly
rejected Microsoft 's conference was a huge barrier . Many shareholders have carried out a lawsuit
against Yahoo for breach of fiduciary duty . In mid 2008 , Carl Icahn , who holds about 5 % of Yahoo
shares have started a war authorization gather to overthrow the current board . Although that is not
much steering capability, shareholder value decreased significantly , replace the board of a large public
company like Yahoo is not an easy job . Despite the support of one of the largest shareholders and the
most influential of Yahoo , Mr. Icahn has not achieved its initial target, eventually withdrew from the
bidding activities through your authorized her in July 2008 , instead won three seats on the board of
Yahoo extended .

November 2008, Yahoo announced they were seeking a replacement for chief executive Jerry Yang , co-
founder of the company . January 2009 , Carol was appointed as CEO Barlz company . Yahoo and
Microsoft back then negotiations and signed a partnership agreement in operation Internet search and
advertising in July 2009 . Results Yahoo's business continues to deteriorate , revenue fell from a year
ago, Carol Bartz was fired . CFO Tim Morse was named interim chief executive in September 2011 .

Since October 2011, a number of private investment funds have been negotiating the acquisition of
Yahoo . November 2011 with news that Microsoft continues to buy back the interest in Yahoo . January
4, 2012 , the president of PayPal , Scott Thompson was appointed CEO of Yahoo . January 17, 2012 ,
Jerry Yang and withdrew from the board of Yahoo . Analysts said that Yang 's departure could speed up
the sale of appreciated assets , such as Yahoo's 40 % stake in Alibaba and investments in Yahoo Japan .

January 31, 2008

Board
Yahoo! Inc. .
701 First Avenue
Sunnyvale , CA 94089

Dear Mr. Roy Bostock , Chairman of the Board

I am writing on behalf of the Board of Directors of the Microsoft proposal to conduct business
combination between Microsoft and Yahoo! . Under our proposal , Microsoft would buy all of Yahoo!
common stock , valued at $ 31/co stock price of Microsoft shares closed January 31, 2008, may be paid
in the form of $ 31 in cash or 0.9509 of a share of Microsoft common stock . Microsoft would provide
each Yahoo! shareholder with the ability to choose to receive cash or common shares of Microsoft. One

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Pr. Dr. Truong Thi NamThang

half of the Yahoo! common shares will be exchanged for shares of Microsoft common stock and one -
half of the Yahoo! common shares will be converted into the right to receive cash. Our proposal is to any
financing conditions do.
This proposal offers value 62 % higher than the closing price of Yahoo! common stock was $ 19.18 on
January 31, 2008. Paragraph value is clearly quite large . Whether to use any financial instruments -
EBITDA , free cash flow , operating cash flow , net income , or price targets - this proposal really
attractive for the shareholders of the company his .
We believe that Microsoft common stock of investment opportunities is very attractive for the
shareholders of Yahoo! . Microsoft revenue growth and profit growth of 15 % and 26 % , the average
return on equity of 35 % in the past three years . Microsoft 's share price has generated shareholder
returns of 8 % over the past year and 28 % over a period of three years, the result is higher than the
average company in the S & P500 . We believe that Microsoft has significant potential for continued
strong growth in the business sector of our core , which recently launched Windows Vista , and other
strategic initiatives .
Microsoft 's consistent belief that the combination of Microsoft and Yahoo! is the best way to deliver
maximum value for our shareholders , as well as create a company more efficient and competitive , with
can provide greater value and better service for our customers . In late 2006 and early 2007 , let us
explore a variety of ways in which the two companies can work together . The discussion is based on a
vision that the online businesses of Microsoft and Yahoo! should be linked to create a competitor in the
market more effectively online . We have discussed a number of alternatives ranging from commercial
partners to the merger proposal , which you rejected . While a commercial partnership may make sense
at one time , Microsoft believes that the only option is the combination of Microsoft and Yahoo! that we
are proposing in this letter .
In February 2007 , I received a letter from the company president said he views the Board of Yahoo! As
letter that "now is not the right time from the perspective of the neck our shareholders to enter into
discussions regarding an acquisition transaction . " The reason for this view was the Yahoo! Board of
Directors are confident that the company has " potential " if successfully implemented the strategy of
technological change based on operational initiatives , such as Project Panama , and rearrange the
organization significantly . One year has passed, and the competitive situation has not improved .
While the growth of online advertising continues, there are significant benefits of economies of scale in
advertising activities , investment costs for search index build , and in research and development , this is
a sufficient condition for this sector should be converged . Today, the market is increasingly dominated
by one player who is consolidating its dominance through the sale and merger . Together, Microsoft and
Yahoo! can offer a credible alternative for consumers, advertisers and publishers . Synergies of this
combination fall into four areas :
Economy of scale: This combination enables synergies related to scale economics of the advertising
platform where today there is only one competitor on a large scale . This includes collaboration on both
search and search advertising unrelated to strengthen the value proposition to both advertisers and
publishers . In addition, this combination allows us to consolidate capital costs .
Expand R & D capacity : The talent combined resources of our technique can be focused on R & D, for
example, the search and advertising platform. Together we can open up new levels of innovation,
providing users with an enhanced experience, a breakthrough in the field of search engine and
advertising platform capabilities.
Performance : Eliminating redundant infrastructure and operating costs will overlap improved financial
performance of the combined unit .
For users new experience : the ability to focus our engineering resources in a number of emerging
scenarios such as video , mobile services , online commerce , the media society , and the social interface
is greatly enhanced .

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Pr. Dr. Truong Thi NamThang

We appreciate the opportunity to further discuss with you how to optimize the integration of our two
businesses , to create a leading technology company in the world with special interface and the ability to
search & advertising . They should also note that we intend to offer significant remuneration packages
for engineers , leaders and employees across all key sectors .
We spent a lot of time and resources to analyze the potential transaction and are confident that the
combination will receive all necessary approvals . We look forward to discussing this with you . Both
internal legal team and our external advisors ready to advise them conveniently and quickly as possible.
We have proposed negotiation definitive merger agreement and have the opportunity to carry out a
number of limitations and confirms our positive . Because a portion of the aggregate merger
consideration will consist of Microsoft common stock , we would provide Yahoo! the opportunity to
conduct appropriate limited appraisal for Microsoft . We are prepared to deliver a draft merger
agreement to you and can start immediate discussions .
Because of the importance of this project for shareholders of all of you and us, as well as the ability to
disclose information selectively , we intend to publish the contents of this letter tomorrow morning.
Given the importance of these discussions and the value related to our proposal , we expect the Yahoo!
Board to conduct a full assessment of our proposal . Microsoft 's leadership team and myself will be
happy to meet the requirements of the company and the Board of Directors of him as soon as possible.
Depending on the reaction of Yahoo! , Microsoft has the right to pursue all necessary steps to ensure
that Yahoo! 's shareholders the opportunity to realize the value of our proposal .
We believe that this proposal is a unique opportunity to create significant value for the shareholders
and employees of Yahoo! , the combined company will be better positioned to provide greater value for
the users and advertisers . We hope that you and your Board share our enthusiasm , and we look
forward to getting answers quickly and smoothly .
Sincerely,
Steven A. Ballmer
CEO
Microsoft Corporation

Questions for Discussion:

1. Executive Board and the board of Yahoo have acted for the best interests of shareholders to
reject takeover from Microsoft yet?
2. Discuss the actions and executive board of Yahoo has done to prevent takeover by Microsoft.
3. According to you, Microsoft's offer is good for shareholders of Yahoo, and Microsoft
shareholders ?
4. Discuss the difficulties that minority shareholders face when the deal as a board of Yahoo?

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