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Yahoo Board Escapes MS Bear Hug: Yahoo Jitsu!

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The Yahoo board of directors will formally reject Microsoft's $31 bid, according to a report today in the WSJ. The Microsoft letter (i-banker parlance, a bear hug) sent to the Yahoo board.

The Jiu Jitsu move that Yahoo used to slip out of Microsoft's arms? The board stated the 62 percent preimum "massively undervalues" Yahoo and doesn't cover the risk that regulators here and abroad might body slam the deal.

Rumors are rife that Yahoo may tag out in search, tapping its former tag team partner, Google, to crush Microsoft. Google, combined with Yahoo's share of searches, would become the de facto search engine on the Internet, achieving Eric Schmidt's stated goal:

In martial arts and grappling, the bear hug is a dominant position, allowing great control of an opponent. The more brutal world of corporate M&A offers many escape routes.

The Yahoo board concluded Microsoft was trying to"steal" the company in its current weakened position. So the MMA match between the two Web 1.0 titans promises to go several more rounds. Yahoo's has popped posion pills, designed to prevent a hostile takeover. A poison pill is the corporate M&A equivalent of steroids, making Yahoo a tougher opponent to take down.

Of course, the rejection of Microsoft's bid is no surprise to Search Engine Watch readers, who saw the Yahoo News report undervaluing Microsoft's offer.

In any case, we're in for a bloodbath: Yahoo "begs" (Google, save us!), Microsoft borrows (to buy Yahoo) and Google "steals" search from their #2 competitor? Or it may just be an inverse bear hug by the Yahoo board, designed to squeeze more money out of Microsoft.

For industry experts on the Microhoo deal, check out Kevin Newcomb's roundup of industry experts who manage the largest global paid search campaigns and organic search strategies here, here, and here.

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