Microsoft withdraws Yahoo! takeover offer

Following a three-month tug-of-war, software giant Microsoft has withdrawn its multi-billion dollar takeover bid for internet group Yahoo!. The two sides have proved unable to agree a purchase price. On Saturday Microsoft announced that, despite its latest increased offer, there has been no movement by Yahoo!. "Clearly a deal is not to be," were the words of Microsoft boss Steve Ballmer in a letter sent to Yahoo! and released by Microsoft on Saturday evening.

The world's largest software company hoped that the takeover, originally priced at $45bn (€28bn), would help it break Google's dominance in online search and advertising. Yahoo!, however, demanded well over $50bn. In its letter detailing the withdrawal of the offer, Microsoft also definitively ruled out launching the oft-threatened hostile takeover.

According to a press release by Steve Ballmer on the company's website, Microsoft increased its final offer by around $5bn. Ballmer said, the conditions demanded by Yahoo! do not make sense for Microsoft, with Yahoo! demanding at least an additional $5bn on top of the increase already offered. "It is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal," stated Ballmer. The takeover would have been by far the most expensive in Microsoft's history.

Ballmer informed Yahoo! boss Jerry Yang of the withdrawal of the offer in a letter on Saturday evening. "I am disappointed," wrote Ballmer. According to US media reports, the heads of the two companies recently met for last ditch attempts to reach an agreement. Microsoft had already repeatedly threatened to withdraw its offer.

Ballmer does not want to risk a hostile takeover of Yahoo!, partly due to concerns about arch-rival Google. Yang has made clear that, in the event of a hostile takeover, Yahoo! would take steps which would make the business undesirable for Microsoft. In parallel to the negotiations with Microsoft, Yahoo! has been testing an alliance with Google involving search advertising. Microsoft has repeated its heavy criticism of this alliance. According to experts, a hostile takeover would be drawn-out and expensive for Microsoft and the outcome uncertain.

"We continue to believe that our proposed acquisition made sense for Microsoft, Yahoo! and the market as a whole," stated Ballmer. He conceded that, "Yahoo! would have accelerated our strategy," but expressed his confidence that Microsoft could achieve its goals without Yahoo!.

(trk)