Monday, 5 May 2008

Microsoft pulls out of offer for Yahoo!

The ongoing saga of Microsoft's attempts to buy Yahoo! came to an abrupt halt on Saturday when a top level meetings between the executives of both companies failed to reach an agreement. Despite Microsoft upping their bid price to nearly US$50bn, Yahoo! still held out their position that the bid was undervaluing the business and so Microsoft finally withdrew their offer.

Shares in Yahoo! fell as news of this development reached the markets, and the question now remains - what will Yahoo! do now? Will they continue to pursue the other business alignments that were being investigated during the takeover offer period, such as with AOL, or try to build on the recent advertising trial with Google?

It's no doubt good news for the web search market that Microsoft hasn't pursued this acquisition to a successful conclusion, but it now leaves Yahoo! in a weaker position from which they need to develop their business and services to help them maintain their position in the market, and to protect themselves from other predatory takeover attempts. Microsoft are also likely to be reviewing the outcome and deciding where to spend their cash now and it may eventually come about that another purchase attempt will be made if Yahoo!'s value takes another hit in the future.

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