Microsoft Cancels Yahoo Takeover Bid May 06, 2008

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Microsoft has pulled its $47.5 billion bid for Yahoo after the company refused its latest offer.

Yahoo has been playing hard to get for months now but this weekend, Microsoft’s vocal CEO, Steve Ballmer, announced that it’s ending the takeover bid.

Microsoft originally offered $31 per share for Yahoo, an offer that was rejected. Microsoft then threatened Yahoo but Yahoo countered with plans of a hook-up with Google. Ballmer tried convincing Yahoo founder Jerry Yang last week and upped the offer to $33 per share, or around $5 billion extra but Yang claimed Yahoo is worth $38 per share - yeah right - and refused. In an open letter to Yang, Ballmer said:

“I am disappointed that Yahoo! has not moved towards accepting our offer. In our conversations this week, we conveyed our willingness to raise our offer to $33 per share. This increase would have added approximately another $5 billion of value to your shareholders and would have reflected a premium of over 70% compared to the price at which your stock closed on January 31.

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.”

Still, others wouldn’t mind some of that Microsoft cash and there’s talk that AOL has approached the software giant to talk about a possible tie-up. I bet it has.-Martin Lynch

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