Yahoo Ends Talks Of Deal With Microsoft
Yahoo Inc.'s efforts to revive takeover talks with Microsoft Corp. have reached a dead end, setting the stage for the Internet pioneer to turn over a piece of its advertising platform to online search leader Google Inc.
The news disclosed Thursday caused Yahoo shares to plunge by more than 10 percent as investors abandoned hope that Microsoft would renew a five-month quest to buy the Sunnyvale-based company.
Yahoo tried to renew the discussions at Microsoft's last offer of $47.5 billion, or $33 per share, but the software maker wasn't willing to bid that much again, according to a statement released Thursday.
Microsoft Chief Executive Steve Ballmer had withdrawn his oral offer of $47.5 billion offer after Yahoo CEO Jerry Yang asked for $37 per share in a May 3 meeting at a Seattle airport.
Shortly after that breakdown, Microsoft tried to convince Yahoo to sell its online search operations instead.
But Yahoo concluded that its search engine - the Internet's second most popular behind Google - was too important to sell piecemeal.
Yahoo said Microsoft "unequivocally" rejected the notion of buying the entire company in a meeting held Sunday.
In statement, Microsoft asserted its plan involving the purchase of Yahoo's search operations would have been worth at least $33 per share to Yahoo.
Shares of Yahoo fell $3.47 to $22.68, after it announced the end of talks with Microsoft. Microsoft shares jumped 70 cents, or 2.6 percent, to $27.82.
With Microsoft apparently out of the picture, Yahoo is turning to Google for help.
Also Thursday, Yahoo announced it has hired Internet search leader Google to sell some online ads in hopes of boosting its profit.
The Sunnyvale-based company announced the plans late Thursday after its stock plunged 10 percent on news that its efforts to revive takeover talks with Microsoft had hit a dead end.
Yahoo Inc. is now counting on Google Inc.'s superior moneymaking system to appease its angry shareholders as it tries to fend off a shareholder mutiny being led by activist investor Carl Icahn.
By using Google's superior advertising technology, Yahoo believes it can boost its annual cash flow by $250 million to $450 million in the first year of the deal.
The partnership could last up to 10 years if it can win antitrust approval.