Microsoft walks away from Yahoo deal

Written on 4th May 2008                                                                                                              3 COMMENTS
Boris Veldhuijzen van Zanten, Serial Internet Entrepreneur

Microsoft has announced just 30 minutes ago that they have withdrawn their bid for Yahoo. Here is a letter from Steve Ballmer to all Microsoft employees and here is the official press release from from Yahoo’s Chairman Roy Bostock (not Jerry Yang).

I can’t wait to see what is going to happen on Monday when the markets open. We assume that Yahoo’s shares are going to drop significantly which will either bring Microsoft back to the table or even Google.

On Friday Microsoft reportedly upgraded its offer from $33 to something higher. Yahoo made it clear that an offer of anything less than $37 wouldn’t be acceptable.

Yahoo News reports that “Jerry Yang and David Filo, the co-founders of Sunnyvale-based Yahoo, flew to Seattle [on Saturday] morning to meet personally with Microsoft Chief Executive Steve Ballmer and Kevin Johnson, who runs the software maker’s unprofitable online services division”

Everybody anticipated a deal to be announced this Monday based on the news from Microsoft’s new bid and their ongoing negotiations. Seems that things turned out quite different.

UPDATE: Want to know what it was like for David Filo and Jerry Yang to negotiate with Microsoft and have them walk away from the table? Read this great story (from Po Bronson for Wired) about the Hotmail negotiations from December 1998. It gives you great insight in how these kind of deals are negotiated and also shows that walking away from a deal is standard procedure for Microsoft.