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Microsoft abandons Yahoo! bid
Dharam Shourie in New York | May 05, 2008 09:24 IST
Software giant Microsoft has abandoned its three-month old bid to buy Yahoo after the two failed to agree on acceptable price and it concluded a hostile bid was "not sensible."
Microsoft had earlier offered $47.5 billion which translated into $33 per share but Yahoo wanted $57 billion or $37 a share. Originally, the software giant had offered $44.6 billion or $31 a share but raised the offer as the negotiations progressed.
Microsoft announced its decision to withdraw after talks between its chief executive Steven A Ballmer and Yahoo co-founder Jerry Yang in Seattle failed to produce an agreement.
Microsoft had made an unsolicited bid to buy Yahoo so as to compete with Google search engine.
Ballmer in a letter to Yang pointed out that Microsoft had already raised its bid by about $5 billion and despite its best efforts, Yahoo has not "moved towards accepting our offer."
"After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal," said Ballmer.
"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," he wrote.
"We continue to believe that our proposed acquisition made sense for Microsoft, Yahoo and the market as a whole," Ballmer said in the letter posted on the Microsoft website.
No immediate comment was available from Yahoo.
In a statement, Ballmer expressed confidence that Microsoft move towards its goal to pursue its online efforts on its own.
"We have a talented team in place and a compelling plan to grow our business through innovative new services and strategic transactions with other business partners," Ballmer said.
The New York Times quoted analysts as saying that the breakdown in the talks is likely to send Yahoo's shares plunging and generate uncertainty among investors about the company's management.
Yahoo has been exploring alternatives to Microsoft's bid, including a search advertising partnership with Google, which could lift its profits and perhaps its stock price, analysts were quoted a saying.
MSNBC.com, a joint venture of Microsoft and NBC Universal, quoted Ballmer as saying that he had concluded that pursuing the hostile option through a so-called proxy battle was "not sensible."
But Yahoo hasn't necessarily faded from Microsoft's cross hairs, it said, adding that software giant could "conceivably" renew its bid later this year if Yahoo cannot bounce back from more than two years of financial lethargy.