Microsoft steps back from Yahoo bid
A takeover that would have created one of the largest single rivals to Internet giant Google has been abruptly canceled, as Microsoft has formally withdrawn its bid to acquire Yahoo.
Microsoft CEO Steve Ballmer has confirmed the move Saturday evening in a letter that has been delivered to Yahoo chief Jerry Yang as well as published online.
The Microsoft executive has revealed that his company earlier this week raised its bid from $31 per share to $33, but claims that a combination of Yahoo's demand for an even higher bid and deliberate attempts to sour the deal have made any takeover unrealistic. He also contradicts a recent rumor that a hostile takeover was close, instead saying that any attempt to circumvent the Yahoo board with a proxy battle would be destructive.
"It is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders," Ballmer explains. "This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. 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."
Some of these steps have included recent gestures towards a permanent deal with Google that would see at least some of Yahoo's search ads outsourced to its Californian neighbor. To Microsoft, the alliance would drive further business to Google, splinter Yahoo's own revenues, and push out many valuable engineers that Microsoft would consider crucial in any takeover.
The truce ends a more than three-month standoff between Microsoft and Yahoo, which began in late January when Microsoft publicly submitted a bid worth $44.6 billion in an attempt to create a larger rival to Google in the online ad and search marketplaces. Yahoo has rejected the offer since the beginning, claiming that Microsoft has underestimated Yahoo's value.
Apple has stood to feel at least a slight impact from the since nullified deal. While most of its web deals are with Google, the electronics maker has installed Yahoo search and weather tools on the iPhone and iPod touch, and allows Apple TV users to browse photo albums from Yahoo-owned Flickr.
Regardless of what may have occurred, Microsoft now plans to pursue its earlier strategy and will develop its ad and search businesses without Yahoo. This includes both its own staff and possible "strategic transactions" with other companies, according to Ballmer. However, the top-ranking Microsoft official says that his company has not changed its opinion of what the acquisition would have meant to its future.
"I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares," he says. "By failing to reach an agreement with us, you and your stockholders have left significant value on the table. But clearly a deal is not to be."
Microsoft CEO Steve Ballmer has confirmed the move Saturday evening in a letter that has been delivered to Yahoo chief Jerry Yang as well as published online.
The Microsoft executive has revealed that his company earlier this week raised its bid from $31 per share to $33, but claims that a combination of Yahoo's demand for an even higher bid and deliberate attempts to sour the deal have made any takeover unrealistic. He also contradicts a recent rumor that a hostile takeover was close, instead saying that any attempt to circumvent the Yahoo board with a proxy battle would be destructive.
"It is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders," Ballmer explains. "This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. 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."
Some of these steps have included recent gestures towards a permanent deal with Google that would see at least some of Yahoo's search ads outsourced to its Californian neighbor. To Microsoft, the alliance would drive further business to Google, splinter Yahoo's own revenues, and push out many valuable engineers that Microsoft would consider crucial in any takeover.
The truce ends a more than three-month standoff between Microsoft and Yahoo, which began in late January when Microsoft publicly submitted a bid worth $44.6 billion in an attempt to create a larger rival to Google in the online ad and search marketplaces. Yahoo has rejected the offer since the beginning, claiming that Microsoft has underestimated Yahoo's value.
Apple has stood to feel at least a slight impact from the since nullified deal. While most of its web deals are with Google, the electronics maker has installed Yahoo search and weather tools on the iPhone and iPod touch, and allows Apple TV users to browse photo albums from Yahoo-owned Flickr.
Regardless of what may have occurred, Microsoft now plans to pursue its earlier strategy and will develop its ad and search businesses without Yahoo. This includes both its own staff and possible "strategic transactions" with other companies, according to Ballmer. However, the top-ranking Microsoft official says that his company has not changed its opinion of what the acquisition would have meant to its future.
"I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares," he says. "By failing to reach an agreement with us, you and your stockholders have left significant value on the table. But clearly a deal is not to be."
Comments
It would behoove Microsoft if you worried less about the share value of another company and instead focused your efforts on the inferior products and out-of-touch marketing efforts of your company's computer software divisions. Have you seen your stock lately?
Sincerely,
The Computer Industry
it might not be over. Yahoo stock price might drop now and MS might try again.
It'll drop, but if MS makes another offer it will go up again. Not the doubling we saw this this last offer, but some. If MS wants Yahoo they'll have to come at it another way.
If Ballmer had been a competent CEO from the free market (which he's not -- he is an unproven hack), he would have approached Yahoo much more sensitively.
As it was, Ballmer's aggression created risk and could have destroyed Yahoo, certainly making many of its key employees leave. The strength of a firm like that is not guaranteed to stick around. An atmosphere of entrepreneurship could easily melt away from Yahoo and it could die. Particularly if it had to link up with Microsoft.
Making Yahoo "compatible" with Microsoft's products would have been a death sentence for Yahoo. MS's whole strategy is to use power, aggression and fear to generate technology. Fortunately, it doesn't work that way anymore. MS is a dinosaur whose record in the last 10 years is of creative death and commercial stagnation. Their software is an amazing diagram of how to design software the wrong way, and make your users dislike the experience.
<Wakes up with a frozen Gmail account>
i'm sorry to read that. i thought this takeover had serious potential for great entertainment. like one of those disaster movies from the '70s, with a great cast, a painfully bad plot, and very cheesy effects.... i feel deprived!
I entirely agree; it would have been fun to watch the implosion. Although at the same time, I couldn't help feeling sad watching Yahoo! being eaten up after a decade of use. I remember too many of the good old days of Yahoo during my youth!
As with its products, MSFT has seen that its boorish antics are sapping its own power away, resulting in MS's inevitable decline.
If Ballmer had been a competent CEO from the free market (which he's not -- he is an unproven hack), he would have approached Yahoo much more sensitively.
As it was, Ballmer's aggression created risk and could have destroyed Yahoo, certainly making many of its key employees leave. The strength of a firm like that is not guaranteed to stick around. An atmosphere of entrepreneurship could easily melt away from Yahoo and it could die. Particularly if it had to link up with Microsoft.
Making Yahoo "compatible" with Microsoft's products would have been a death sentence for Yahoo. MS's whole strategy is to use power, aggression and fear to generate technology. Fortunately, it doesn't work that way anymore. MS is a dinosaur whose record in the last 10 years is of creative death and commercial stagnation. Their software is an amazing diagram of how to design software the wrong way, and make your users dislike the experience.
Excellent.
i'm sorry to read that. i thought this takeover had serious potential for great entertainment. like one of those disaster movies from the '70s, with a great cast, a painfully bad plot, and very cheesy effects.... i feel deprived!
I entirely agree; it would have been fun to watch the implosion. Although at the same time, I couldn't help feeling sad watching Yahoo! being eaten up after a decade of use. I remember too many of the good old days of Yahoo during my youth!
As with its products, MSFT has seen that its boorish antics are sapping its own power away, resulting in MS's inevitable decline.
If Ballmer had been a competent CEO from the free market (which he's not -- he is an unproven hack), he would have approached Yahoo much more sensitively.
As it was, Ballmer's aggression created risk and could have destroyed Yahoo, certainly making many of its key employees leave. The strength of a firm like that is not guaranteed to stick around. An atmosphere of entrepreneurship could easily melt away from Yahoo and it could die. Particularly if it had to link up with Microsoft.
Making Yahoo "compatible" with Microsoft's products would have been a death sentence for Yahoo. MS's whole strategy is to use power, aggression and fear to generate technology. Fortunately, it doesn't work that way anymore. MS is a dinosaur whose record in the last 10 years is of creative death and commercial stagnation. Their software is an amazing diagram of how to design software the wrong way, and make your users dislike the experience.
Excellent analysis.
What was Balmer thinking? It will be interesting to see what sort of value the Yahoo! board can get for the shareholders in bankruptcy.
Bankrupcy? Maybe you should stop reading the FUD. Yahoo is in the black.
I like the reaction given by Yahoos Roy Bostock who dismissed the unsolicited bid as a "distraction"
M$ ARE a distraction as a company as windows is as an operating system.
Can you believe that ballmer said at the Mix keynote that this was a done deal
I missed that lol. Nearly as bad as 'Mission accomplished' ...!
Yahoo overplayed their hand. They could have had $$$
Maybe it's not just about the money. As a percentage increase, how much money more money would you want over what you already earn, to be Balmer's personal butler?
What was Balmer thinking?
Wait, Ballmer can think? I wasn't so sure after the "monkey boy" episode of a few years ago.