Microsoft Corp withdrew its US$42.3 billion bid to buy Yahoo Inc, scrapping an attempt to snap up the tarnished Internet icon in hopes of toppling online search and advertising leader Google Inc.
The decision to walk away from the deal came on Saturday after last-ditch efforts to negotiate a mutually acceptable sale price proved unsuccessful.
The talks reached a breaking point after Jerry Yang (楊致遠) and David Filo, the cofounders of Sunnyvale, California-based Yahoo, flew to Seattle in the morning to meet personally with Microsoft chief executive Steve Ballmer and Kevin Johnson, who runs the software maker’s unprofitable online services division, a source familiar with the talks said. The person was not authorized to speak publicly and asked not to be identified.
“Clearly a deal is not to be,” Ballmer wrote to Yang in a letter sent late on Saturday.
Microsoft was willing to pay US$47.5 billion, or US$33 per share, up from the bid’s value of US$29.40 per share, Ballmer’s letter said.
But Yahoo’s board demanded at least US$53 billion, or US$37 per share, Ballmer said. That would have been nearly double Yahoo’s stock price of US$19.18 at the time Microsoft first made its bid a little over three months ago.
And Yang, who became Yahoo’s chief executive officer 11 months ago, wanted US$38 per share in a Wednesday meeting, the source familiar with the discussions said. That meeting was held the day after Yang and Yahoo chairman Roy Bostock called to ask Microsoft not to withdraw its bid, the source said.
The anticlimactic ending came as a surprise, given that many analysts believed Microsoft wanted to close the deal badly enough to pursue a hostile takeover — a risky maneuver that would have required an attempt to replace the Yahoo board that spurned rejected the bid.
Although he had threatened a hostile takeover attempt last month, Ballmer said he concluded that waging a so-called proxy battle was “not sensible.”
“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,” Ballmer wrote to Yang.
But Yahoo has not necessarily faded from Microsoft’s crosshairs.
The software maker conceivably could renew its bid later this year if Yahoo fails to bounce back from more than two years of financial lethargy.
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