Microsoft Walking Away from Yahoo Acquisition

On February 1st, Microsoft made headlines after publicly offering to purchase Yahoo for $44.6 Billion ($31/share). Microsoft's interest in Yahoo was primarily focused around their advertising business in an attempt to gain talent and technology in that sector to further compete with Google. On February 9th, Yahoo officially declined the offer due to claims the bid "massively" undervalued Yahoo.

Negotiations continued, opening the possibility for a hostile takeover from Microsoft. In the end, however, it appears Microsoft is walking away from the negotiations and will not pursue a hostile takeover.

In a letter from Microsoft's Steve Ballmer to Yahoo's Jerry Yang, Ballmer detailed his reasons. In the end, Yahoo was insisting on a $53 billion price ($37/share), while Microsoft's offer topped out at $47.5 billion ($33/share).

"Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer. 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," said Ballmer.

Another key factor included Yahoo's recent outsourcing of advertising services to Google, which could introduce regulatory hurdles in pursuing an acquisition.

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