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Yahoo! chief on why the Microsoft bid failed
Dharam Shourie in New York | May 06, 2008 14:52 IST
Internet's second most popular search engine Yahoo! has said it was open to selling itself to Microsoft, but the software giant's chief executive Steven A Ballmer and his deal makers were not keen to negotiate and ultimately withdrew their proposal.
"They (Ballmer and his aides) chose to walk away after we put a price on the table, and they didn't want to negotiate," Yahoo's co founder and chief executive Jerry Yang said in an interview published in the New York Times on Monday.
Microsoft had offered to buy Yahoo, second only to Google, for $31 a share, or $44.6 billion, in February, but the search engine felt it was worth more.
"From my perspective, we were open all along to selling to Microsoft. We just feel Yahoo, either stand-alone or with Microsoft, is worth more than what they put on the table," Yang told NYT.
But the paper says Yang's account conflicts with that of Microsoft's advisers and executives who have said that they received no counter offer from Yahoo! for three months, after Microsoft's deadline to consummate the deal had expired. They also say that Yang and his board settled on a price of $37 a share and ultimately refused to budge.
Microsoft had raised its initial bid to $33 a share when Yang and his co-founder, David Filo, met with Ballmer and other Microsoft executives at the Seattle airport on Saturday. After that meeting, Ballmer made public a letter to Yang withdrawing the offer.
In the interview, Yang and Roy Bostock, Yahoo's chairman, said that throughout the process they were open and receptive to a merger with Microsoft.
Yang said that he spent personal time alone with Ballmer but that they were ultimately unable to bridge their differences.
Yang also looked ahead to the daunting task of guiding Yahoo's growth as an independent company under heavy scrutiny, the paper said.
"I feel like we now have the task to continue to build shareholder value," he was quoted as saying. "This is just creating another set of challenges we have to overcome as a company. We have to show the world the opportunity that we have been talking about for the last three months."
One immediate problem for Yang, NYT said, is frustration among shareholders including some of the largest ones. In reaction to the deal's collapse, Yahoo's stock fell almost 15 per cent on Monday, to $24.47.
"I am extremely angry at Jerry Yang and at the so-called independent board," Gordon Crawford, portfolio manager for Capital Research Global Investors, which owns 6 per cent of Yahoo, was quoted as saying. The firm's parent owns a total of 16 per cent of Yahoo, making it the largest shareholder.
Yang argued that the Microsoft bid had opened up new doors for Yahoo. "We feel Microsoft approaching us has created an opportunity for us to talk to just about anybody and everybody in the industry," he said.
He said the company would do new deals "in a way that ensures that it's the right thing to do for Yahoo, and not because of some time pressure."
One of those deals, the paper said, could be a tie-up with its chief rival, Google. In April, Yahoo! conducted a two-week advertising test with Google, whereby Google served up its own more lucrative ads on 3 per cent of Yahoo searches in the United States.
Yahoo!, the paper said, might also consider tie-ups with AOL, a division of Time Warner.