Microsoft drops bid after Yahoo rejects higher offer
SAN FRANCISCO -- The software giant withdrew its offer just hours after it sweetened the bid to $33 per share, or about $47.5 billion, at a meeting in Seattle between Microsoft CEO Steve Ballmer and Yahoo CEO Jerry Yang, said a person with knowledge of the talks. Yang had insisted on $37 per share, the source said.
Microsoft's decision to walk away culminated a whirlwind, three-month courtship that it initiated on Jan. 31 with a $31-per-share unsolicited bid in an effort to compete more effectively with Google for online advertising revenue and Web searches.
Yahoo repeatedly rejected Microsoft's offer, saying it undervalued the company. Microsoft at times vowed to lower its bid and threatened to launch a bloody proxy fight to oust Yahoo's 10-member board — including Yang — if Yahoo didn't accept the offer by April 26. Yahoo ignored the deadline.
Yet in a letter to Yang that Microsoft released Saturday, Ballmer said it did not make sense for Microsoft to pursue a proxy fight, which could take months. "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.
Ballmer said Microsoft would continue to pursue other online efforts on its own.
In a statement Saturday night, Yang said with the "distraction of Microsoft's unsolicited proposal now behind us, we will be able to focus all of our energies on executing the most important transition in our history."
Microsoft's withdrawal was as abrupt as its audacious takeover bid, which was made public Feb. 1. Its hasty retreat could have long-lasting implications for Ballmer — who has been questioned by some investors and analysts for attempting such a landscape-shifting deal — and Yang, who is trying to right Yahoo after a rough financial patch the past few years.
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