M&A

No Big Deal: Yahoo-Microsoft Talks End

As Yahoo makes announcement of talks breaking off, reports surface about blog-related venture between it and Google.
Stephen TaubJune 12, 2008

Discussions between Yahoo Inc. and Microsoft about a huge deal are officially off. And immediately with the announcement from Yahoo, reports began circulating that Yahoo and Google would make a joint announcement on Thursday, perhaps about a technology blog.

Yahoo’s Thursday press release, which announced the end of talks regarding a potential Microsoft transaction, noted that among the possibilities discussed had been an acquisition of all of Yahoo, or a partial acquisition. Among those reporting on a Yahoo-Google arrangement in the works was Reuters, which mentioned the possibility of a technology blog.

TechCrunch reportedly said the announcement is likely to be a search partnership between the two companies that outsources all or part of Yahoo search marketing, and possibly search itself, to Google, according to Reuters.

Yahoo said it ended discussions with Microsoft after numerous meetings and conversations with Microsoft regarding a number of transaction alternatives. Included were a meeting between Yahoo and Microsoft on June 8, at which chairman Roy Bostock and other independent board members from Yahoo participated. At that meeting, Microsoft representatives “stated unequivocally that Microsoft is not interested in pursuing an acquisition” of all of Yahoo, even at the price range it had previously suggested, according to a Yahoo press release.

After months of speculation, the first announcement of Microsoft’s interest in Yahoo — with the potential for a deal of nearly $50 billion — came in late January.

In its announcement today, Yahoo said its board had determined, after careful evaluation, that an acquisition of its search business alone, which Microsoft proposed, would not be consistent with the company’s view of the converging search and display marketplaces; would leave the company without the independent search business that it views as critical to its strategic future; and would not be in the best interests of Yahoo stockholders.

“Yahoo remains focused on maximizing value for stockholders by continuing to execute on its strategy of being the ‘starting point’ for the most consumers on the Internet and a ‘must buy’ for advertisers,” it said in its announcement.

Yahoo’s stock tumbled on the news, falling more than 10 percent. Microsoft climbed 4 percent while Google rose less than 1 percent.