Monday, May 5, 2008

Microsoft pulls its offer to Yahoo

Lately the software giant Microsoft has pulled back its bid of $44.6 billion for Yahoo!. Microsoft failed to convince Yahoo board of directors for the bid.

Microsoft offered approximately $44.6 billion in a half-cash, half-stock deal, which represented a premium of more than 60% to Yahoo's stock price at the time. Yahoo's board of directors rejected this offer as it undervalued its business.

Yahoo is still firm on its decision. Microsoft had increased its bid from $31 per share to $33 but Yahoo rejected it as they were expecting $37 per share.

With this Yahoo! has lost the superiority of a software giant and Microsoft has diminished it's hope to stand on the internet advertising. With less than 5% users using Microsoft Search engine, it is clear that Microsoft needs Yahoo, more than Yahoo needs Microsoft.

Also there has been a decrease in the yahoo Stock price after Microsoft pulled back.

In other cases, Yahoo is likely to have deals with Google and AOL. But none have come up with a competing proposal.

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