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Microsoft gives up Yahoo takeover bid

Posted: 06 May 2008 ?? ?Print Version ?Bookmark and Share

Keywords:Microsoft withdrawal? Yahoo takeover? online market?

Microsoft Corp. has withdrawn its bid for Yahoo Inc. and is not pursuing a hostile takeover.

In an open letter to Yahoo CEO Jerry Yang, Microsoft CEO Steve Ballmer expressed disappointment over Yahoo's rejection of his company's final bid of $33 per share, representing approximately $5 billion over its initial bid of $31 per share, and a 70-percent premium over Yahoo's stock value on Jan. 31, the day Microsoft made its first bid.

Ballmer said that Yahoo's asking price of $37 per share, which amounts to $5 billion more than Microsoft's final bid, did "not make sense for us," and thus "it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal."

The Microsoft executive added that he decided against a hostile takeover as Yahoo could pursue "a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo today," which he said would make the acquisition of Yahoo undesirable to Microsoft.

"Your apparent plan to pursue such an arrangement in the event of a proxy contest or exchange offer leads me to the firm decision not to pursue such a path. Instead, I hereby formally withdraw Microsoft's proposal to acquire Yahoo," declared Ballmer.

Three-month struggle
Microsoft's withdrawal puts an end to the three-month takeover plan that Yahoo resisted since day one.

In a statement released the same day as the announcement of Microsoft's withdrawal, Yahoo's Yang expressed confidence that "with the distraction of Microsoft's unsolicited proposal now behind us, we will be able to focus all of our energies on executing the most important transition in our history so that we can maximize our potential to the benefit of our shareholders, employees, partners and users."

Google victory
Meanwhile, Google stands to win in the turn of events between Microsoft and Yahoo, some analysts say. Experts were surprised that Yahoo was not lured into accepting Microsoft's generous offer, and predict further stock price plunge, according to an Agence France-Presse report.

Gartner analyst Van Baker commented that with Microsoft's withdrawal, Yahoo must convince the market they are worth more than they were before the software giant's offer.





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