Microsoft withdraws Yahoo offer

6 May 2008

Microsoft has withdrawn its bid for rival Yahoo – but analysts are split on the likelihood of a deal yet being struck.

After months of manoeuvring, Microsoft officially pulled out of its pursuit of the search engine company on Monday. Microsoft is said to have raised its initial offer, but not to the region of $37 a share that Yahoo was holding out for.

After the collapse of the negotiations, Yahoo's shares plunged by 15% and one senior Yahoo investor publicly declared that CEO Jerry Yang had "overplayed a weak hand".

The situation has led some market commentators to suggest that a deal for around $34 a share is now likely to be agreed between the firms, or that Microsoft will use the moment to try a hostile takeover of the search engine company..

However, analysts such as Silicon Alley Insider suspect that the deal has gone permanently sour, and that Microsoft's CEO Steve Ballmer's appetite for the acquisition has left him.

"Yahoo isn't the only one who has backtracked here – so has Steve Ballmer. He's just done it over the course of three months," wrote the Insider's Henry Blodget.

Category: MSN, Search engines, Yahoo