Microsoft, Yahoo Inch Closer To Proxy Battle

Redmond, WA (AHN) - Microsoft appears ready to wage a proxy fight to win the reluctant hand of Internet portal Yahoo, reports said Wednesday. In light of an upcoming battle, the two companies seem to be making preparations.

Earlier this week, Microsoft Chairman Bill Gates told the AP the software giant isn't talking to Yahoo about raising the $31 per share offer worth $41 billion. However, the company has hired proxy war specialist Innisfree M&A Inc. to prepare.

Microsoft doesn't have much time to ready its takeover troops. Nominations for Yahoo board of directors ends March 14 and the Sunnyvale, Calif. All 10 board members are up re-election.

It may be cheaper to elect a friendlier board of directors than sweeten the original bid. Although it could cost Microsoft up to $30 million for a proxy fight, each $1 added to the per share offer would cost Microsoft $1.4 billion. Last week, Yahoo CEO Jerry Yang rejected Microsoft, saying the offer "significantly undervalues" his company.

Meanwhile, Yahoo told the Securities and Exchange Commission employees who were fired or quit would continue receiving their salary and health benefits for up to two years. Yang Tuesday denied the notice signaled any upcoming change in owner.

AT&T can be added to the list of companies Yahoo is talking with in hopes of finding an alternative to Microsoft, reports the Wall Street Journal. Already, the Internet company has had offers from rival Google, media giant News Corp. and others.