In a surprise move, Microsoft announced it has withdrawn its offer for Yahoo. Boy this thing is taking a long time. If this is just posturing, it seems like it is taking focus off the big picture for both firms.
More to come.
Update from RTT News:
Microsoft Corp. (MSFT) said on Saturday that it has withdrawn its proposal to purchase Yahoo! Inc. (YHOO). Microsoft’s CEO Steve Ballmer said, “We continue to believe that our proposed acquisition made sense for Microsoft, Yahoo! and the market as a whole. Our goal in pursuing a combination with Yahoo! was to provide greater choice and innovation in the marketplace and create real value for our respective stockholders and employees.”
Ballmer added that despite the best efforts, including raising Microsoft’s bid by roughly $5 billion, Yahoo! has not moved toward accepting the offer. After careful consideration, Microsoft believes the economics demanded by Yahoo! does not make sense, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw the proposal.
Ballmer said, “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.”
Microsoft’s president for platforms and services, Kevin Johnson, said, “We are investing heavily in new tools and Web experiences, we have dramatically improved our search performance and advertiser satisfaction, and we will continue to build our scale through organic growth and partnerships.”
I believe this is typical posturing. Generally, an acquiring company expects to pay more than the first bid and the company being purchased expects to do what it can to increase the initial bid. The only challenge in this case may be that Yahoo seems to care more about being independent than it does doing what some think is best for shareholders.
I am personally not convinced a Microsoft/Yahoo combination makes good sense for either company because Yahoo is just so large it will take a long time to digest properly. In a market that evolves as rapidly as the web, a large acquisition makes it that much more difficult to respond to changing times.
Microsoft raised its offer by $5 billion to $33 a share, but Yahoo wanted $37 a share.
"We remain focused on maximizing shareholder value and pursuing strategic opportunities that position Yahoo! for success and leadership in its markets. From the beginning of this process, our independent board and our management have been steadfast in our belief that Microsoft’s offer undervalued the company and we are pleased that so many of our shareholders joined us in expressing that view. Yahoo! is profitable, growing, and executing well on its strategic plan to capture the large opportunities in the relatively young online advertising market. Our solid results for the first quarter of 2008 and increased full year 2008 operating cash flow outlook reflect the progress the company is making. Today, Yahoo! has:
- a refined strategic focus to drive enhanced volume and yield;
- reorganized to focus its efforts on its most promising products and services;
- invested in innovations designed to revolutionize display advertising and facilitate closing the competitive gap in search; and — enhanced expense and resource management to support improved profitability."
Jerry Yang, co-founder and chief executive officer, Yahoo! Inc. added, "I am incredibly proud of the way our team has come together over the last three months. This process has underscored our unique and valuable strategic position. 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 maximize our potential to the benefit of our shareholders, employees, partners and users."
OK — is this still posturing? Maybe not. These seem like final words from both parties. Am I right? Wrong? Time will tell as always.