The software major says the breakdown came despite having raised the bid to US$33 a share, a 70% premium to its original offer of US$31 a share
Microsoft has decided to drop its hostile bid for Yahoo after failing to reach an agreement with the Internet giant's top management on the price for the proposed deal. The world's biggest software company said it failed to convince Yahoo's board to accept its bid - even after sweetening its offer to US$46bn.
Microsoft said the breakdown came despite having raised the bid to US$33 a share, a 70% premium to its original offer of US$31 a share. Yahoo stock closed on Friday at US$28.67 a share.
Microsoft also said it would not pursue a hostile takeover of Yahoo, including a proxy battle, after concluding that the latter would likely respond with actions that would make it undesirable as an acquisition candidate.
"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," Microsoft CEO Steve Ballmer said.
The move comes three months after Microsoft first announced its proposed acquisition of Yahoo, whose board rejected the deal, saying the offer undervalued the company's business. Since then, Yahoo has pursued talks over potential alternative deals with Google, AOL and News Corp., but with to no avail.
Along with the statement, Microsoft released a letter written to Yahoo co-founder and CEO Jerry Yang, in which Ballmer noted that Microsoft offered to raise its bid from US$31 per share to US$33 a share. That was still not enough, as Yang sought at least US$37 per share, according to Ballmer.
In a statement released on Saturday, Yahoo maintained its belief that the Microsoft bid undervalued its business, though the company did not confirm whether Microsoft had raised its price.
"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 so that we can maximize our potential to the benefit of our shareholders, employees, partners and users," Yang said.
05-05-2008, 05:01 PM
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