Yahoo shares fell slightly in morning trading Monday, following the passing of Microsoft's closely watched Saturday deadline without the parties hammering out a merger deal.
Shares of Yahoo dipped to US$26.60 per share in morning trading, off 0.75 percent from its close of US$26.80 on Friday. Investors were initially feeling a little more bullish at the start of the session, pushing the shares up as high as US$27.09 per share.
Microsoft shares, on the other hand, dipped as low as US$29.37 in early morning trading before rising to US$29.50 later in the session. Its trading price, however, was still down roughly 1 percent from its close of US$29.83 on Friday. And as Microsoft's shares dip, the value of its initial cash-stock offer price of US$31 a share on February 1 further declines.
This week, Microsoft is expected to lay out its next plan of action, which executives ranging from CEO Steve Ballmer to chief bean counter Chris Liddell have previously said could include going directly to Yahoo shareholders via a tender offer or a proxy fight, as well as withdrawing the offer.
CNET News.com readers who participated in our poll regarding Microsoft's options are largely betting that it will "walk away" from the acquisition bid, with 44.8 percent of the votes. A close 39 percent are betting on a proxy fight, and 16.2 percent say a tender offer is likely.
Keep in mind that Microsoft could do all three, and in any order.
One path that Microsoft could take, for example, assuming that Yahoo doesn't call an annual shareholder meeting in the interim, would be to withdraw its offer for a month or two, and let Yahoo's stock give up some ground.
It may not make sense for Microsoft to roll out its proxy slate until it gets closer to forcing Yahoo to hold a shareholder meeting. At the earliest point, it could head to the Delaware Chancery Court to make the request Jul. 13.
In the meantime, between withdrawing its offer and announcing its proxy slate, Microsoft may want to announce a tender offer, giving investors a real piece of meat to put on their plate and, hence, a reason to vote in Microsoft's opposition slate. The question is, will that piece be tasty enough for investors?
This article was originally a blog post on CNET News.com.
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