"After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us," Microsoft CEO Steve Ballmer said in withdrawing the $44.6 billion bid.
In a surprise turnabout, Microsoft late Saturday withdrew its bid to acquire Yahoo.
"Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer," Microsoft CEO Steve Ballmer said in a statement. "After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us, and it is in the best interests of Microsoft stockholders, employees, and other stakeholders to withdraw our proposal."
The news was unexpected, because it came shortly after Microsoft had reportedly begun to engage more directly with Yahoo management. Microsoft initiated what amounted to a hostile takeover bid back in February, when Ballmer offered $31 for outstanding shares of Yahoo common stock. That amounted to a bid of some $44.6 billion for the search-engine powerhouse.
However, Yahoo CEO Jerry Yang resisted the bid, and Yahoo management reportedly rebuffed direct talks with Microsoft. Yahoo also sought potential allies, including AOL and Google, investigating various partnerships and link-ups as ways of parrying Microsoft's acquisition attempt.
There had been little dialogue between Yahoo and Microsoft, and no apparent forward progress, until Friday, when The New York Timesreported that Microsoft had boosted its bid to as much as $33 per share.
On Saturday, the paper trumpeted what it said was a confidentially sourced report that Microsoft and Yahoo were sitting down in "active merger talks."
Then, late Saturday, came the abrupt issuance of a press release from Microsoft indicating that its offer was no longer on the table. Microsoft's press release included a copy of a letter addressed from Ballmer to Yahoo's Yang. The letter offered possible insight into Ballmer's reasons for pulling Microsoft's bid. Ballmer wrote that he did not want to engage in a "protracted proxy fight" over outstanding shares.