Microsoft Does NOT buy YahooMay 5, 2008 at 8:16 am | Posted in Economoney, Internet, Online services, Software | 1 Comment
Back in February, I spoke a little about Microsoft’s plans to buy Yahoo. Many were disappointed by the move. Yahoo made a few shifts internally that appeared to support the move. But when Microsoft’s formal offer came in, Yahoo turned it down saying it was too low. They wanted a much richer offer. Indeed, the value of Yahoo shares climbed as a result of the debate, removing the premium of Microsoft’s offer.
“Microsoft feels hurt that Yahoo isn’t jumping at the chance to sell the company at a premium over market, and Yahoo’s upset because it looks like Microsoft is trying to rip them off by buying the company for less.”
Ballmer gave Yahoo three weeks to agree to its takeover bid, which now stands at about $42 billion, or face a proxy fight and possibly a lower offer. In other words, a hostile takeover.
The 3 week deadline passed and Microsoft has decided to drop the bid, to the relief of many. I suspect enough Yahoo shareholders polled agreed with the board that MS could see it could not win.
“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,” Ballmer wrote.
Given that Microsoft already has many of the same services as Yahoo, perhaps they could focus on improving them. Then they could compete more strongly. Google needs strong competition.