Microsoft withdraws bid for Yahoo!

Microsoft announced today that it has withdrawn its offer to buy Yahoo!. The original offer had been made about three months ago. Microsoft announced its decision in a letter to Jerry Yang, CEO of Yahoo!

Microsoft had raised its bid from the original USD$44 billion to USD$47.5 billion (USD$33 per share) but Yahoo! was looking for about USD$53 billion (USD$37 per share).

In today’s letter, Microsoft CEO Steve Ballmer indicated that a hostile takeover as threatened earlier was “not sensible”.

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.

With its proposal to acquire Yahoo! off the table, Microsoft 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.

Yahoo! may feel that it has dodged a bullet for now but there is nothing preventing Microsoft from mounting another bid later should Yahoo! stock drop further. Yahoo! may not have done more than simply buy itself a bit of time.

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