Anatomy of a deal that was not to be For three months, the proposed Microsoft-Yahoo deal dominated tech-industry attention. Jan. 31: Microsoft proposes acquisition...
Anatomy of a deal that was not to be. For three months, the proposed Microsoft-Yahoo deal dominated tech-industry attention.
Jan. 31: Microsoft proposes acquisition of Yahoo for $31 a share. The bid is made public Feb. 1.
Feb. 11: Yahoo board of directors unanimously rejects the offer, saying it “substantially undervalues” the company.
February and March: Yahoo reportedly explores alternative deals with News Corp., Google and Time Warner unit AOL.
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April 5: Microsoft CEO Steve Ballmer issues an ultimatum: If an agreement is not reached in three weeks, he will launch a hostile takeover. A person familiar with the deal and Microsoft’s thinking said there was “no meaningful dialogue” between the companies until after Ballmer’s ultimatum.
April 9: Yahoo announces limited test of Google’s search-advertising service to display ads next to results from Yahoo’s search engine. Microsoft cries foul on antitrust grounds. Microsoft explores alternatives, including possible deals with News Corp. and other companies that expressed interest in acquiring Yahoo, said the person familiar with the deal.
April 15: Executives from both sides meet in Portland to discuss “social issues,” including different company cultures, as well as Yahoo’s valuation, this person said.
April 22: Yahoo reports solid earnings and reiterates its position that the Microsoft bid “substantially undervalues” the company. Before the report, Ballmer says that it will not have an impact on Microsoft’s offer.
April 24: Microsoft reports slightly better-than-expected earnings, but its stock sinks, dragging down the value of the half-cash, half-stock offer for Yahoo. Chief Financial Officer Chris Liddell reiterates Ballmer’s deadline, saying the company could go hostile or drop its proposal if no progress toward a deal is made.
April 26: The deadline passes with no discernible movement toward a deal or toward a hostile takeover.
April 30: Microsoft’s board of directors reportedly meets. Microsoft and Yahoo meet in the San Francisco Bay Area. Yahoo co-founder and CEO Jerry Yang suggests a price of $38 a share, said the person familiar with the matter.
May 1: Ballmer tells Microsoft employees, “I know exactly what I think Yahoo! is worth to me, exactly. I won’t go a dime above, and I will go to what I think it’s worth if that gets the deal done. … We ought to announce something in relatively short order.”
May 2: Anonymous reports in The Wall Street Journal and The New York Times say negotiations have intensified and the sides are separated by price, though the gap has narrowed.
Today: Yang and Yahoo co-founder David Filo meet with Ballmer and Kevin Johnson, president of Microsoft’s platforms and services division, in Seattle. Yang and Filo say Yahoo board wants $37 a share, says the person familiar with the deal. Microsoft had increased its offer to $33 a share. At about 4 p.m., Ballmer sends a letter to Yang withdrawing the offer. The decision is made public shortly before 5 p.m.
Sources: Seattle Times archives, published reports, a person familiar with Microsoft’s thinking who spoke on condition of anonymity