Microsoft Walks Away from Yahoo Offer

by , 7:50 AM EDT, May 5th, 2008

Microsoft walked away from the table and withdrew its unsolicited bid for Yahoo over the weekend after attempting to sweeten the pot with a new US$46 billion offer. CEO Steve Ballmer said that his company has no plans to pursue a hostile take over attempt, either.

"Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo has not moved toward accepting our offer," Mr. Ballmer 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."

Yahoo Chairman, Roy Bostock, responded "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."

Microsoft presented Yahoo with a $44.6 billion unsolicited buyout offer in February after the Internet search and advertising company reported disappointing earnings. Yahoo rejected the offer and continued to do so even after Mr. Ballmer presented the company with an ultimatum that threatened a hostile take over attempt.

The withdrawal leaves Yahoo open to pursue its own goals in the Internet advertising space. The company could consider a closer alliance with rival Google -- a move the company has already experimented with -- or look at deals with other Internet-related companies like Time Warner's AOL.

The Redmond-based software giant didn't walk away from the deal without letting Yahoo know how it felt. "By failing to reach an agreement with us, you and your stockholders have left significant value on the table," Mr. Ballmer said.

He added "We will move forward and will continue to innovate and grow our business at Microsoft with the talented team we have in place and potentially through strategic transactions with other business partners."