19 February, 2008

Yahoo-Microsoft deal called off !!!

Microsoft was interested in pursuing internet firm Yahoo in a bid to have a competitive edge over in the fast growing online search advertising market that is currently dominated by popular search engine Google.

It is unfortunate that the largest deal in the web world has been called off on Tuesday (11th February). Yahoo has rejected Microsoft's unsolicited takeover bid of $45 billion. After a week of uncertainity as to whether or not Global internet major -- Yahoo -- would accept Microsoft's unsolicited multi-billion dollar offer, the decision has finally been taken.

The Board of Directors of Yahoo seem to have found Microsoft's offer of $31 per share unsatisfactory and said: "After careful evaluation, the Board believes that Microsoft's proposal substantially undervalues Yahoo!, including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects."

Microsoft initially made the $45 billion bid on the 1, February offering about 62% above the share price. Analysts saw this as an attempt aimed at challenging tech rival Google's online market search dominance. Unfortunately, Microsoft's shares fell and the deal was later worth $42 billion.

According to reports, Yahoo's board also unanimously stated that the proposal, currently valued at $42 billion, was not in the best interests of its shareholders.

Experts now claim that Google could form an alliance with Yahoo, however, the latter insists that the board is still in the process of evaluating all its strategic options. On the other hand, Microsoft is still contemplating whether to sweeten their offer, launch a proxy fight or simply withdraw. It is clear that the battle of tech titan is far from over.

Goldman, Sachs & Co., Lehman Brothers and Moelis & Company are Yahoo's financial advisers, while Skadden, Arps, Slate, Meagher & Flom LLP are Yahoo's legal advisers. Further, Munger Tolles & Olson LLP is counsel to the outside directors of Yahoo!. With such a wide array of advisors, Yahoo are likely to take a right decision.