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Microsoft Gives Up on Yahoo For Now

Posted by in Industry News

Microsft has announced that it is walking away from it’s attempt to acquire Yahoo after raising their bid by a further US$5 Billion (around US$2 per share more than the original offer of US$31 per share). The raised bid was again rejected by Yahoo, stating that the increase to the offer was only half of what they considered to be reasonable to move forward.

“From the beginning of this process, our independent board and our management have been steadfast in our belief that Microsoft’s offer undervalued the company and we are pleased that so many of our shareholders joined us in expressing that view,” said Roy Bostock, chairman of Yahoo, in a prepared statement.

Microsoft strongly disagrees and a letter to Yahoo CEO Jerry Yang indicates not only their frustration at the rejected offer but also lays down some ground work for possible anti-trust issues being raised over the recent dealings between Yahoo and Google in regards to paid search listings;

“This would also effectively enable Google to set the prices for key search terms on both their and your search platforms and, in the process, raise prices charged to advertisers on Yahoo. In addition to whatever resulting legal problems, this seems unwise from a business perspective unless in fact one simply wishes to use this as a vehicle to exit the paid search business in favor of Google, Ballmer wrote in his letter.

Yahoo stocks areexpected to plummet now that the offer has been withdrawn and the move may prompt lawsuits from Yahoo shareholders who disagree with the move. We feel this is not the end of this story but more so a move into the next chapter. We will continue to post updates on developments. For more info check out the source article on Wired blog epicenter.

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