Microsoft withdraws from Yahoo!; shareholders restive with Yang
05 May 2008
Microsoft has announced having withdrawn its proposal to acquire Yahoo! on Saturday shotly after having raised its cash and stock bid from $31 per share to $33, a prmium of 70 per cent to Yahoo's closing stock price of $19 on 31 January 2008. (See: Microsoft to raise bid for Yahoo! to $33 per share).
Steve Ballmer, chief executive officer, Microsoft, said, ''We continue to believe that our proposed acquisition made sense for Microsoft, Yahoo! and the market as a whole.
He said Microsoft's goal in pursuing a combination with Yahoo! was to provide greater choice and innovation in the marketplace and create real value for the respective stockholders and employees of the two companies. However, ''Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer," he said.
On Yahoo! holding out for a higher offer of $37 per share, 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.''
He added, ''We have a talented team in place and a compelling plan to grow our business through innovative new services and strategic transactions with other business partners. While Yahoo! would have accelerated our strategy, I am confident that we can continue to move forward toward our goals.''
In a courteous letter to Yahoo! CEO and co founder Jerry Yang also ruled out a hostile bid, saying, "Also, after giving this week's conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders. 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. (See:Microsoft CEO Steve Ballmer's letter to Yahoo! co founder and CEO Jerry)
In his letter, Ballmer also said that Yahoo's plans of outsourcing to Google Yahoo's! key Panama paid search system internet search terms would make an acquisition of Yahoo! undesirable to Microsoft, as it would undermine Yahoo's viability and affect its ability to retain its talented engineering team.