Microsoft Throws in the Towel

In an open letter to the board of Yahoo, Ballmer stated, "Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer."

Although Microsoft raised their bid to $31 a share (an estimated $44.6 billion in total) there for search engine powerhouse Yahoo, the acquisition was not meant to be.

Although Microsoft raised their bid to $31 a share (an estimated $44.6 billion in total) there for search engine powerhouse Yahoo, the acquisition was not meant to be. Yahoo claimed the price was still under bidding the value of Yahoo, a point that was only driven further home by the continued stock price gains of the company.

Analysts believed Microsoft preferred an amicable acquisition since trends have shown that key employees leave during a hostile takeover. Microsoft not only wanted the technologies and brand name Yahoo provides, but their employees as well in order to successfully take on the number one search engine provider, Google.

With the possibility of a hostile takeover in sight, Steve Ballmer, Microsoft CEO threw in the towel on the acquisition. In an open letter to the board of Yahoo, Ballmer stated, "Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer." Ballmer goes on to say, "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."

The letter continues on a personal note to Yahoo CEO, Jerry Yang. It describes that the recent actions by Yahoo have made the purchase even more undesirable.

“We regard with particular concern your apparent planning to respond to a "hostile" bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons….”