Microsoft Abandons Yahoo AcquisitionMay 3, 2008 – 7:24 PM
Microsoft has dropped its nearly three-month-long pursuit of Yahoo, ending a historic acquisition attempt whose failure takes Microsoft back to square one in its quest to boost its online business to better compete against Google.
“We continue to believe that our proposed acquisition made sense for Microsoft, Yahoo and the market as a whole. Our goal in pursuing a combination with Yahoo was to provide greater choice and innovation in the marketplace and create real value for our respective stockholders and employees,” said Microsoft CEO Steve Ballmer in a statement distributed early Saturday evening.
Yahoo did not immediately reply to a request for comment.
Microsoft had raised its initial bid by about US$5 billion, but that didn’t convince Yahoo to accept the revised offer, Microsoft said. “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.
All parties with a stake in the deal had been waiting for Microsoft to announce its next move, after Yahoo failed to agree to a deal by last Saturday, the deadline Microsoft had set three weeks earlier.
But Microsoft stayed silent for days, as observers speculated whether it would walk away or prepare a hostile takeover. However, on Friday anonymously sourced reports in The Wall Street Journal and The New York Times said that Microsoft and Yahoo had turned a corner and were for the first time negotiating merger terms in earnest.
Ultimately, it seems that Microsoft’s management, fatigued by Yahoo’s resistance and demands, decided that engaging in a proxy fight to oust Yahoo’s directors would be an arduous and nasty process. After all, for Microsoft, the goal of the massive acquisition was to quickly become a mightier competitor to Google in online advertising.