Microsoft/Yahoo: The Blame Game

Microsoft’s Ballmer and Yahoo’s Yang are pointing fingers at each other, blaming the other for the failed merger. With Yahoo’s stock dropping some 14% ($4.30 per share), Yang told Reuters today:

We were negotiating a way to find common ground and then on Saturday they chose to walk away… They started it and they walked away.

Ballmer stated on Saturday with his letter withdrawing the bid, he was disappointed that Yahoo! would not accept their $33 per share offer up from the initial $31 per share offer from back in January:

In our conversations this week, we conveyed our willingness to raise our offer to $33.00 per share, reflecting again our belief in this collective opportunity. This increase would have added approximately another $5 billion of value to your shareholders, compared to the current value of our initial offer. It also would have reflected a premium of over 70 percent compared to the price at which your stock closed on January 31. Yet it has proven insufficient, as your final position insisted on Microsoft paying yet another $5 billion or more, or at least another $4 per share above our $33.00 offer.

Yang says Yahoo! is still leaving the door open for Microsoft:

If they have anything new to say, we would be open … I am more than willing to listen.

Let’s put things this into perspective:

  • Yahoo’s stock closed at $24.37 per share today
  • January 31st, the day before Microsoft made the offer, Yahoo’s stock had closed at $19.18 per share
  • February 1st, the day of the Microsoft offer, Yahoo’s stock jumped up 47% to close at $28.38 per share
  • Given the Yahoo! share holders are not happy with Yang, chances are the stock is going to continue to fall as the week progresses. Some analysts project it could go as low as $20 per share or less [U.S. News & World Reports]
  • $33 or even the initial $31 per share offer (which would have been 72% and 61% higher than the January 31st close) would have been a great deal
  • Should Microsoft choose to come back around, it is pretty sure sign their offer is going to be much lower this time. Further if Yahoo’s stock keeps dropping it could turn into Microsoft bailing out Yahoo!

Microsoft’s stock faired well today, only dropping 16¢ per share to close at $29.08 per share.

News Source: Todd Bishop’s Microsoft Blog

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