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Microsoft backs out of Yahoo bid

updated 10:10 pm EDT, Sat May 3, 2008

Microsoft Nixes Yahoo Bid

Microsoft on Saturday evening triggered surprise by withdrawing its bid for Yahoo. Company chief Steve Ballmer has validated earlier public comments expressing doubt over the viability of concluding a deal and has revealed that Microsoft offered to raise its bid up to $33 per share in an attempt to win over the Yahoo board of directors, which has insisted so far that the initial $31 per share bid undervalues the search engine giant's worth. The Microsoft executive also states that Yahoo has insisted on a higher-still bid and that his firm doesn't consider an extended proxy effort to install a sympathetic board to be effective.

"After giving this week's conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders," Ballmer says. "This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft."

Ballmer also confirms that Yahoo's potential alliance with Google is one of the motivating factors behind the decision to cancel the deal. A partial deal with Google would "fragment" Yahoo's search strategy and encourage company developers to leave, negating one of the incentives behind the initial takeover attempt, he says. The deal would also create potential antitrust issues that Microsoft would not want transferred to itself in the event of a successful takeover.

Yahoo is widely known to have been contacted by Google early on and deliberately taken the approach as part of larger "poison pill" strategy, which is believed to have included potential merger talks with AOL.

Microsoft has not outlined its longer-term strategy in the wake of the deal but says that it will continue to pursue its own course in improving its competitiveness in the search advertising space, which in the past has included buyouts of aQuantive and other major web advertising firms.

"By failing to reach an agreement with us, you and your stockholders have left significant value on the table," Ballmer concludes. "But clearly a deal is not to be."



By Electronista Staff
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  1. freudling

    Banned

    Joined: Mar 2005

    0

    Nebulous

    Who. Writes. This. Stuff? So confusing. Run on sentences, like:

    "Company chief Steve Ballmer has validated earlier public comments expressing doubt over the viability of concluding a deal and has revealed that Microsoft offered to raise its bid up to $33 per share in an attempt to win over the Yahoo board of directors, which has insisted so far that the initial $31 per share bid undervalues the search engine giant's worth. "

    My god man, hire some people that can write clearly and make sense.

  1. howiethemacguy

    Fresh-Faced Recruit

    Joined: Sep 2007

    0

    This is good.

    I'm glad Yahoo fought them off. Yahoo doesn't need to be acquired and Microsoft doesn't need to buy Yahoo.

  1. Peter Bonte

    Fresh-Faced Recruit

    Joined: Aug 2001

    0

    brainz

    There would be a big braindrain when MS acquired Yahoo, those two company's don't fit together. Advertising was the biggest reason for MS but the cost would be to high (apparently) and 1+1 won't be more than 2 with a hostile takeover.

  1. rytc

    Senior User

    Joined: Jan 2001

    0

    phew

    I won't have to close down my flickr and Yahoo accounts afterall

  1. imagine engine

    Fresh-Faced Recruit

    Joined: Aug 2007

    0

    Universal Messengers

    Instead of Microsoft trying to buy the competition why don't they work together on opening their code so as to provide consumers with a true universal chat Messenger that supports Audio/Video chat? I thought Microsoft was understanding this when they announced releasing Microsoft Messenger 7 for OS X but the A/V chat ability is only for corporate users and not regular home users. I'd love to see iChat AV have the ability to do A/V chat no matter if you use a MSN email account, Gmail account or Yahoo email account.

  1. rtbarry

    Fresh-Faced Recruit

    Joined: Aug 2001

    0

    "drats! foiled again!..

    ...dammit, we might have to actually create something on our own that actually adds value to peoples' lives.

    how does one go about that?"

  1. Haroscarfel

    Fresh-Faced Recruit

    Joined: Nov 2007

    0

    great

    now what am i going to do with all this spam.

  1. thibaulthalpern

    Fresh-Faced Recruit

    Joined: Feb 2008

    0

    I agree with nebulous

    I agree with nebulous that the writing for this particular article is horrible. Someone needs to really pay attention their sentence formation. Perhaps they should listen to some podcasts by Grammar Girl among other things.

  1. bradpdx

    Fresh-Faced Recruit

    Joined: Sep 2007

    0

    Writing

    Strunk & White, Elements of Style. A timeless classic that should remain close to your keyboard at all times.

  1. koolkid1976

    Fresh-Faced Recruit

    Joined: May 2003

    0

    It's not over

    Yahoo's stock is tanking in after hour trading! Just like I knew it would. Down over 21%. Now Microsoft can present their $31 share price to the stock holders.

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