Microsoft/Yahoo: The End

After over 5 1/2 months the Microsoft/Yahoo saga has finally come to an end. In a press release from June 12th Yahoo announced:

Yahoo! Inc. … today announced that discussions with Microsoft regarding a potential transaction — whether for an acquisition of all of Yahoo! or a partial acquisition — have concluded. The conclusion of discussions follows numerous meetings and conversations with Microsoft regarding a number of transaction alternatives, including a meeting between Yahoo! and Microsoft on June 8th in which Chairman Roy Bostock and other independent Board members from Yahoo! participated. At that meeting, Microsoft representatives stated unequivocally that Microsoft is not interested in pursuing an acquisition of all of Yahoo!, even at the price range it had previously suggested.

Here is Microsoft’s statement:

“In the weeks since Microsoft withdrew its offer to acquire Yahoo!, the two companies have continued to discuss an alternative transaction that Microsoft believes would have delivered in excess of $33 per share to the Yahoo! shareholders. This partnership would ensure healthy competition in the marketplace, providing greater choice and innovation for advertisers, publishers and consumers.

So, now what? Later in the day Yahoo announced an advertising partnership with Google.

Yahoo said the Google ad deal represents a revenue opportunity of as much as $800 million a year, and $250 million to $450 million in annual operating cash flow. Yang said the companies don’t believe the agreement requires regulatory approval, but the companies are waiting three-and-a-half months to allow the U.S. Justice Department to review it.

With this new deal though, it still not may not be ‘the end’ of a possibility of a Yahoo acquisition:

“The agreement allows either party to terminate the agreement in the event of a change in control of either party. The agreement also requires Yahoo! to pay a termination fee if the agreement is terminated as a result of a change in control that occurs within 24 months. The termination fee is $250 million, subject to reduction by 50 percent of revenues earned by Google under the agreement.”

It is interesting that Yang thinks the deal wouldn’t need regulatory approval. Good thing both companies are waiting 3 1/2 months for reviews as this deal has already gotten the attention of U.S. Senator Herb Kohl, chairman of the Senate Antitrust Subcommittee:

“We will closely examine the joint venture between Google and Yahoo announced today. This collaboration between two technology giants and direct competitors for Internet advertising and search services raises important competition concerns. The consequences for advertisers and consumers could be far-reaching and warrant careful review, and we plan to investigate the competitive and privacy implications of this deal further in the Antitrust Subcommittee.”

Even with the added announcement of the ‘Google Deal’ Yahoo’s stock still dropped $2.81 /share (~10.5%) on June 12th to close at $23.52 / share. As of this post Yahoo’s stock still has not recovered and is not trading around $22.60 per share.

New Source: Todd Bishop’s Microsoft Blog

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