Microhoo: No Deal
Yesterday, Microsoft announced they have withdrawn their offer to acquire Yahoo. After much push and pull, the saga is finally over. On the other hand, Yahoo and Google appear to have solidified their partnership for online advertising.
Here is the chronology of the MSFT + YHOO merger talks:
- 1/31/2008: Microsoft proposed to acquire Yahoo for $31 per share. Proposition made official on 2/1/2008.
- 2/11/2008: Yahoo’s directors rejected the offer as it “substantially undervalues” the Company.
- 2/11/2008: Yahoo initiated talks with AOL, News Corp. and Google on possible merger opportunities. Silence afterward.
- 2/11/2008 — 4/5/2008: Yahoo (like any other large company) mulls over the acquisition, no official word. The blogosphere goes nuts.
- 4/5/2008: Microsoft’s Steve Ballmer issues a three week ultimatum/threat detailing that unless no agreement is met, he will initiate a hostile takeover with shareholders.
- 4/9/2008: Yahoo discloses launch of a limited test, blending Google’s Search Advertising within Yahoo search results. Microsoft (having experience at it) declares antitrust concerns.
- 4/15/2008: Both companies meet to discuss company cultures and their value they both provide. (You can also read my observations on Corporate culture between Yahoo and AOL.)
- 4/22/2008: Yahoo reports healthy Q1 2008 earnings; not astounding by any investor’s perspective, but decent. Steve Ballmer reiterates that they won’t raise the price. Yahoo was still in open talks between Time Warner (AOL) and News Corporation and Google.
- 4/24/2008: Microsoft reports decent earnings; but their stock drops making it less desirable for YHOO shareholders.
- 4/26/2008: The third-week passes from Ballmer’s threat. No official movement to join Microsoft. Blogsphere begins to raise stronger doubt that Yahoo would consider merging with Microsoft.
- 4/30/2008: Yahoo raises the stakes to $38 per share, after Microsoft and Yahoo’s board of directors meet.
- 5/1/2008: Steve Ballmer sent an internal e-mail (knowing that it would get leaked) cites, “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.” - 5/2/2008: Post-Ultimatum: Yahoo and Microsoft are generally OK with merger; decision hangs on price. Yahoo wants $38/share, Microsoft wants $33.
- 5/3/2008: Weekend: Microsoft withdraws their offer to acquire Yahoo after much time passed without agreement. Yahoo issued a statement acknowledging Microsoft’s withdrawal. Steve Ballmer criticized for not following through on threat for a hostile takeover.
There you have it!
That’s the chronology of the Yahoo/Microsoft (Microhoo) deal. While some think it was a valuable deal, I think it was a way for Yahoo to dodge that bullet and drive their innovation and creativity harder than ever. Much like when AOL solicited Time Warner, no one expected the bloody implosion of creativity and risk AOL placed on Time Warner.
As some folks said at AOL: “…We’re great at attracting talent. What we do, we acquire it, then drain it out, lobotomize it and kick them out the back door.” I couldn’t agree more with this unattributed quote. Perhaps Yahoo didn’t want to agree to a lower price to keep their talent, in the door without lobotomizing employees into Redmond-bots.
Nothing prevents Microsoft to acquire Yahoo in the future, although, next time, people might want Ballmer and Jerry Yang to privately debate mechanics of the deal instead of using the Internets to do it.
