May 4, 2008, 1:45 GMT
New York - Software giant Microsoft on Saturday said it had pulled its offer for Yahoo after its higher offer failed to move the internet company.
Software giant Microsoft on Saturday said it had pulled its offer for Yahoo after its higher offer failed to move the internet company. EPA/JUSTIN LANE
The collapse of talks between the companies, put ended Microsoft's hopes of buying the web portal to stiffen its competition with Google for internet advertising and software.
Microsoft had raised its bid for Yahoo to 44.6 billion dollars, or 33 dollars per share, as negotiations between the firms intensified over the weekend, but the increase had failed to win over Yahoo executives who had insisted on a higher price of 37 dollars per share.
Despite our best efforts, including raising our bid by roughly 5 billion dollars, Yahoo has not moved toward accepting our offer. 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,' Microsoft chief executive Steve Ballmer said in a statement.
In a letter to Yahoo chief executive Jerry Yang, Ballmer stressed that he believed a merger 'would have created real value for our respective shareholders and would have provided consumers, publishers and advertisers with greater innovation and choice in the marketplace.' However, Microsoft was not willing to increase its bid by a further 5 billion dollars to meet Yahoo's demand.
Yahoo had consistently rejected an earlier 31-dollar-a-share offer.
Ballmer also said his company would attempt a hostile takeover of Yahoo, calling it 'not sensible for Microsoft to take our offer directly to your shareholders.'
He urged Yahoo against responding by forming an online advertising deal with rival Google. Such a deal would devalue Yahoo's market position by decreasing competition and making Yahoo irrelevant in the online advertising sector, essentially eliminating any further merger opportunities with Microsoft, Ballmer wrote.
The three-month long discussion of a Yahoo takeover began with a 45-billion-dollar offer that had shrunk to 41.9 billion dollars by last weekend, when a deadline passed for Yahoo to accept the offer. The internet firm had originally dismissed the bid as undervaluing the company, even though it represented a premium of 62 per cent on the company's pre-offer share price.
Media reports on Friday said Yahoo and Google were close to reaching an advertising partnership that would see Google's ads appearing on Yahoo sites. The move could boost Yahoo's revenues by approximately 1 billion dollars annually since Google's ads have higher click-through rates than Yahoo's.
However the move could face regulatory hurdles.
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