Microsoft withdraws Yahoo! offer

Microsoft announced Saturday that it is withdrawing its offer to purchase Yahoo!, due to the inability of both parties to agree on an acceptable sale price.

Microsoft’s CEO Steve Ballmer said in a letter sent to Yahoo! that the software manufacturer was willing to spend $47.5 billion to acquire Yahoo, or $33 per share.

But Yahoo! insist’s that the computer giant pays at least $53 billion, or $37 per share.

The original offer of Microsoft, dating back to January 31st, amounted to $44.6 billion, or $31 per share. Yahoo! had refused, arguing that it under-valued the society.

On April 22nd, Yahoo! posted its financial results for the first quarter as being higher than the expectations of analysts. Yahoo’s earnings had risen to $542 million, or 37 cents per share, more than triple that of $ 142.2 million, or 10 cents per share, garnered in the same period last year.

Most of this improvement came from a windfall of $401 million generated by the participation of Yahoo! in the parent company Alibaba.com, an e-commerce site in China.

If it were not for the provision of Alibaba, Yahoo! would have benefited of earnings per share of 11 cents, on the whole similar to that of last year. Profit per share was still two cents higher than expected on average by analysts surveyed by Thomson Financial.

Yahoo! has not raised its forecast for the remainder of the year. Microsoft had hopes that its bid would become inevitable if Yahoo! was unable to substantially accelerate its growth.

Microsoft had threatened to oust the board of Yahoo! of its 10 directors to accept its offer this Saturday.

Yahoo! felt from the beginning that it was worth more than what Microsoft offered, even if their share price had dropped to less than $20 at the time of submission of tenders.

Private shareholders are beginning to break silence and are publicly stating their disagreement with Yahoo’s decision to refuse the offer. Now would probably be a good time for Microsoft to come back to the table to make an offer and let the shareholders make their stand. There have been a few lawsuits against Yahoo’s board because of their position, and more are expected to appear in the coming days.

One Thought on “Microsoft withdraws Yahoo! offer

  1. Pingback: WebmasterRadio.FM Coverage of the Microsoft / Yahoo! (non?) Merger | WebmasterRadio.FM Blog

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