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May 4, 2008

Microsoft withdraws offer for Yahoo

Posted by David Hunter at 6:39 AM ET.

The long running soap opera of Microsoft’s attempted acquisition of Yahoo ended after a week of hectic negotiations yesterday as Steve Ballmer withdrew the offer. The fundamental reason was a disagreement on price (Microsoft’s last bid was $33 per share and the lowest Yahoo would go was $37), but Yahoo’s threat of a search ad outsourcing deal with Google proved so much of a poison pill that Microsoft did not care to pursue a hostile takeover.

The two protagonists now get to lick their wounds and pursue their own separate paths to online riches. It’s in the nature of the US legal system that Yahoo’s management and board of directors will be sued for not taking the cash when they could, but worse is the very public acknowledgement of the fundamental weakness of Yahoo’s search ad business. As for Microsoft, despite the happy talk that a Yahoo acquisition would merely have sped up Microsoft’s inevitable success in the online business, the Microsoft employees concerned know that they barely escaped a "synergy" bloodbath which is hardly a vote of confidence. Moreover, if Yahoo’s prospects don’t improve, this may turn out to be merely a merger delayed.

Filed under Acquisitions, Coopetition, Microsoft, Yahoo

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2 Responses to “Microsoft withdraws offer for Yahoo”

  1. The Declining Value Of Redundant News Content On The Web - Publishing 2.0 Says:

    [...] Discussion: Search Engine Land, Googling Google, Between the Lines, CNET, Web Worker Daily, TechCrunch, WeBreakStuff, Simon’s Blog, I4U News, Microsoft News Tracker, TechBlog, DealBook, Paul Mooney, Pocket PC, TechSpot, Joe Duck, TechBays, Epicenter, All about Microsoft, Digital Trends, SEO and Tech Daily, Alice Hill’s Real Tech News, Mark Evans, Los Angeles Times, WebGuild, Mashable!, Todd Bishop’s Microsoft Blog, Valleywag, Quick Online Tips, GigaOM, Profy.Com, AppScout, ClickZ News Blog, The Register and Scobleizer – [...]

  2. Microsoft and Yahoo reopen discussions | Microsoft News Tracker Says:

    [...] On Sunday, Microsoft management thrilled the punters with an announcement that new discussions with Yahoo were taking place concerning an arrangement rather less sweeping than the failed acquisition attempt they gave up on two weeks ago: In light of developments since the withdrawal of the Microsoft proposal to acquire Yahoo! Inc., Microsoft announced that it is continuing to explore and pursue its alternatives to improve and expand its online services and advertising business.  Microsoft is considering and has raised with Yahoo! an alternative that would involve a transaction with Yahoo! but not an acquisition of all of Yahoo!  Microsoft is not proposing to make a new bid to acquire all of Yahoo! at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo! or discussions with shareholders of Yahoo! or Microsoft or with other third parties. [...]

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