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Prepared by:Prepared by:SHERMYNESHADZWA BAHRIN 012012110148SHERMYNESHADZWA BAHRIN 012012110148
NURKARMILAH NASIR 01201303481NURKARMILAH NASIR 01201303481AMALIA YASMIN MOHD RAFI 012013030482AMALIA YASMIN MOHD RAFI 012013030482TUN NURUL AIN MOHD NOR 012012031246TUN NURUL AIN MOHD NOR 012012031246
INTRODUCTIONINTRODUCTIONBackground of the CompanyBackground of the Company
Microsoft CorporationMicrosoft Corporation
- Established at 1975 by Bill Gates and Paul Allen in Albuquerque- Biggest software and IT companies in the world- Microsoft Windows operating system and the Microsoft Office (best selling products)
INTRODUCTIONINTRODUCTIONBackground of the CompanyBackground of the Company
Microsoft CorporationMicrosoft Corporation
Microsoft co-founders Paul Allen (left) Current CEO Satya Nadella and Bill Gates
INTRODUCTIONINTRODUCTIONBackground of the CompanyBackground of the Company
Yahoo! Inc.Yahoo! Inc.
- American multinational Internet corporation (Sunnyvale, California)- Founded by Jerry Yang & David Filo in January 1994- Focus more on Online Internet Service- The biggest part of Yahoo! revenue is advertising
INTRODUCTIONINTRODUCTIONBackground of the CompanyBackground of the Company
Yahoo! Inc.Yahoo! Inc.
Yahoo! Inc. founders Jerry Yang (left) Current CEO Marissa Mayer and David Filo
INTRODUCTIONINTRODUCTIONIssues DiscussedIssues Discussed
Microhoo!Microhoo!
- The role of the board and management in a takeover situation in the US compared to Singapore
- The use of anti-takeover defences- Whether the takeover benefits shareholders of the acquiring and/or company
INTRODUCTIONINTRODUCTIONIssues DiscussedIssues Discussed
Microhoo!Microhoo!
- An acquisition in which the company being purchased doesn’t want to be purchased by the particular buyer that is making bid.
- Yahoo! Is an acquisition and Microsoft is the acquirer- Can be accomplished through either a tender offer OR a proxy fight- Several controversial strategies : Poison pill, crown-jewel defences, golden parachute, Pac-man defences etc.
CASE QUESTIONCASE QUESTION3.1 Did Yahoo’s management and board act in the best interest of
shareholders when rejecting Microsoft’s takeover offer?
- Board of directors had adopted a shareholder-rights plan (anti-takeover defenses)- The more common term for such plans were “POISON PILLS”.- Yahoo!’s plan: gives existing shareholder the right to purchase additional shares - The effect to firm’s management as they failed to maximize shareholder value- Therefore, poison pills are the most effective defences allowed by courts without shareholder
approval- Reflected the owner opposition and negative effect to stock price changes
CASE QUESTIONCASE QUESTION3.2 Discuss the actions taken by Yahoo’s management and board to block
the takeover of Microsoft. Should such actions be prohibited?
Repellents
- Procedures with the common aim of repelling takeovers.- Procedural restrictions - to make takeovers more difficult.- To provide protection for the target company but without acquiring control of it.
White Knights
- May approach another company to place a rival bid.
- The takeover strategy is capacity reduction, - less threatened than by the hostile party
- The friendly investor of a target firm - takeover attempt by another firm.
- Should not be prohibited.
- “Poison pill” – consider effective
3.3 In your opinion, do you believe that the offer by Microsoft is good for (a) the shareholders of Yahoo, and (b) shareholders of Microsoft?
(a) The shareholders of Yahoo!- Microsoft was going to pay US44.6 billion offer (the bid price may be US$31 per share).- Yahoo shows that 62 % contribute premium.- This offer is in the profit category.
(b) The shareholders of Microsoft- Increase the advertising revenue reached US$ 4.74 (Google U.S. $6.12 billion).- As an affiliate, MICROHOO will reach 86% of Internet users in the US and control 59% of
online display advert market.
3.4 What are some of the key differences in rules governing takeovers between the US and Singapore?
Rules governing takeovers in US
i. First, the acquirer can utilize the merger statutes available in every US jurisdiction to acquire 100% of the outstanding common shares of the target (single-step merger).
ii. Second, the acquirer may make a tender offer directly to target common shareholders to purchase their shares and then follow the tender offer with a second-step merger.
Rules governing takeovers in Singapore
i. Secretariatii. General Principlesiii. Spirit and letter of the Codeiv. Rulings and practice statementsv. Enforcement of the Code
3.5 Place yourself in Carl Icahn’s shoes. What are some of the difficulties a minority shareholder faces when dealing with a board like Yahoo’s. Are these difficulties similar in Singapore?
- Who is minority shareholder?
- All minority shareholders who are scattered, (80 % shares) are defined as minority shareholders and they cannot assemble enough votes to act as majority shareholders.
- The origin of the abuse of minority shareholders comes mainly from the greed of some of the majority shareholders (no limitation).
- Remedy for unfairly prejudicial conduct, to be found in Sections 459-461 of the Companies Act 1985(Repealed Act).
- Back to Singapore case, it is quite similar with this case regarding on the what minority shareholder faces.
- However, there is a law for the minority shareholders to demand remedies for any breach that occur.
RECOMMENDATIONRECOMMENDATION- Does it matter who Microsoft buys?
- Yahoo! should be more aware on their rights.
Q & AQ & A
