When rumours regarding Microsoft's acquisition of Yahoo first surfaced in 2006, they were dismissed as simple gossip. However, Microsoft was deadly serious about the takeover bid. We chart the highs and lows of this battle which rocked the IT world.
News Corp's Rupert Murdoch says he won't "get into a fight" with Microsoft over Yahoo, because the software giant has "a lot more money" than his company.
Microsoft sends Yahoo a join-us-or-die letter, claiming that if the two companies can't make a deal in three weeks, Microsoft will take its offer directly to shareholders in a proxy battle. In the letter, signed by Microsoft CEO Steve Ballmer, Microsoft basically tells Yahoo board members they've run out of better options, and it would be foolish not to accept an offer immediately. Microsoft also hints that it would consider Yahoo less valuable if it is forced to mount a proxy fight, thus threatening to lower its offer.
Yahoo again rejects Microsoft's offer on the basis that it is too low. In a letter signed by Chairman Roy Bostock and Yang, the company calls Microsoft's threat of a proxy battle 'unproductive' and says it would consider a deal if Microsoft was willing to offer up more money.
Yahoo says it is testing the display of Google search ads in a small number of its search-engine queries, a move seen as a way to stave off Microsoft's advances. Microsoft immediately attacks the move as anticompetitive and says it would never pass regulatory approval.
News Corp is said to be in talks with Microsoft to join forces to buy Yahoo, seen by many as a way that Microsoft can raise its offer without spending more money. At the same time, talk of a Yahoo-AOL union again makes the rounds.
In the most closely watched earnings reports of its history, Yahoo delivers solid, although not stellar, first-quarter financial results, growing its revenue and net income and exceeding Wall Street's expectations for both. Yang describes the quarter, which ended on March 31, as one of Yahoo's "most exciting" ever. He adds that Yahoo's management and directors are open to any alternatives to maximise shareholder value, including a sale to Microsoft, but they remain convinced that the current bid significantly undervalues the company.
The deadline set by Microsoft for wrapping up negotiations on a deal passes without an agreement being reached. The wait begins for Microsoft to announce its next move. Days earlier, Ballmer and Microsoft Chief Financial Officer Chris Liddell raise the possibility for the first time that Microsoft, instead of attempting a hostile takeover, might walk away from the deal instead.
The Wall Street Journal reports that Microsoft's board met to decide how to proceed with the company's bid to acquire Yahoo, and that no final decision was reached.
The Journal, by now viewed as the companies' preferred conduit for anonymous leaks, reports that the major stumbling block has been price, which Microsoft is willing to increase to $33 (£16.50) per share, but not to the $35 (£17.50) to $37 (£18.50) range that major Yahoo shareholders, management and board members want.
NEXT PAGE: Microsoft withdraws its bid
- The shot heard around the internet
- News Corp says it won't join the fight
- Microsoft withdraws its bid