The Hindu : Front Page : Microsoft drops bid to acquire Yahoo!

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Monday, May 05, 2008
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Microsoft drops bid to acquire Yahoo!

New York/Silicon Valley: Software giant Microsoft has abandoned its three-month-old bid to buy Yahoo! after the two failed to agree on an acceptable price.

Microsoft had offered $47.5 billion, which translated into $33 a share, but Yahoo! wanted $57 billion ($37 a share). Initially, in February, the software giant had offered $44.6 billion or $31 a share, but raised the offer as the negotiations proceeded.

Microsoft announced its decision to withdraw after talks between its Chief Executive Steven A. Ballmer and Yahoo! co-founder Jerry Yang in Seattle failed to produce an agreement on Saturday.

Microsoft had made the unsolicited bid to enable it to compete with the Google search engine.

Mr. Ballmer, in a letter to Mr. Yang, pointed out that Microsoft had already raised its bid by about $5 billion and despite its best efforts, Yahoo! had not “moved towards accepting our offer.”

“After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us…,” Mr. Ballmer said.

Yahoo! dismissed Microsoft’s unsolicited bid as a distraction. “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 maximise our potential to the benefit of our shareholders, employees, partners and users,” Mr. Yang said in a statement.

The New York Times quoted analysts as saying that the breakdown in talks could send Yahoo! shares plunging and generate uncertainty among investors about the company’s management. — PTI

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