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.
Microsoft and Yahoo have turned a corner and are finally negotiating in earnest about a possible merger, although a deal is far from imminent, The New York Times and The Wall Street Journal report, citing anonymous sources.
Microsoft surprises many by announcing that it will drop its acquisition attempt. It confirms that it offered to raise its initial bid to $33 (£16.50) per share, an increase of about $5bn (£2.5bn), but that Yahoo was holding out for $37 (£18.50) per share. "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," Ballmer said in a statement.
In response, Yahoo reiterates its position that Microsoft's offer was too low, and says that many Yahoo shareholders agreed with it. Yang says in a statement that "with the distraction of Microsoft's unsolicited proposal now behind us", Yahoo can continue with "the most important transition in our history".
Yahoo's stock loses significant value on the first day of trading after Microsoft decided over the weekend to walk away from the acquisition. Yahoo's shares close down 15 percent at $24.37 (£12.17), after dropping as low as $22.97 (£11.48) during the day. Large shareholders criticise Yang and the board for letting the deal slip away. In response, Yang grants a series of interviews to large newspapers, saying he is still open to selling Yahoo to Microsoft or another suitor if the price is right. He tells the Financial Times that it was Microsoft, not Yahoo, that was unwilling to complete the deal; his company wanted to continue negotiations on a price. "We did not say it was a take-it-or-leave-it number in the sense that we would never negotiate any more," he said. "We were totally willing to do a transaction, and they walked away."
Also on this day, Yahoo finally sets July 3 as the date for its shareholders meeting. According to its amended bylaws, shareholders have until May 15 to nominate candidates to the board, whose 10 incumbent directors are up for re-election this year.
In an interview with Yahoo's TechTicker, Yahoo President Sue Decker says Microsoft never put its revised $33 (£16.50) per share offer in writing, and acknowledges that a combination of Yahoo and Microsoft assets could yield a very successful company.
Echoing - and adding significant weight to - comments made by other Microsoft officials, Chairman Bill Gates says in Tokyo that Microsoft won't be pursuing tie-ups or takeovers to replace its failed Yahoo bid. Referencing comments made by Ballmer, Gates said that "now at this point, Microsoft is focused on its independent strategy".
Billionaire investor Carl Icahn is mulling a proxy fight against Yahoo's current board members in order to pressure the company to re-establish merger negotiations with Microsoft, CNBC and The Wall Street Journal report. Icahn has bought as many as 50m Yahoo shares since Microsoft walked away from the deal, they report, citing anonymous sources. Microsoft hasn't indicated to Icahn that it would return to the negotiating table, however, and Icahn hasn't decided whether he will go through with the proxy fight.
- The shot heard around the internet
- News Corp says it won't join the fight
- Microsoft withdraws its bid