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Article

Title: Past Shows Microsoft is Only Jilted for Moment

Author: Moore, Heidi N Article Type: Company
Source: Wall Street Journal, v251 n105 pC1(1) Publication Date: May 5, 2008
  ISSN: 0193-2241
URL of Publication: http://www.wsj.com

Microsoft Corp. may yet acquire Yahoo! Inc. despite the company walking away from its recent takeover bid. History shows that companies who reject deals often come around to accepting them after feeling the fury of shareholders after the deals collapse. The takeover of Quaker Oats by PepsiCo is one recent example. After Pepsi abandoned its bid, Coca Cola Co. entered talks with Quaker Oats, only to walk away itself at the last moment. Pepsi then returned and Quaker accepted what was essentially Pepsi's original offer. Oracle Corp.'s bid for PeopleSoft might also prove instructive when it comes to what to expect between Microsoft and Yahoo! in the coming months. Oracle's CEO gradually raised his bid for PeopleSoft over 18 months, until his target eventually accepted the deal when the price reached nearly twice the original offer. Oracle learned its lesson and when it went to acquire BEA Systems in 2007, would not raise its price to the level demanded by BEA, finally walking away from the deal. BEA activist shareholders, unhappy with the failure of the deal, eventually hammered out a deal between the two sides, saving Oracle from having to do the tough negotiating. However, this level of gamesmanship may cause damage to both the bidder and its target, as shareholders dislike the uncertainty.

Companies:
BEA Systems Inc Microsoft Corp
Oracle Corp TecTerms
Yahoo! Inc

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