Microsoft and Yahoo, Love Is in the Air, Still

The two companies re-enter talks
A Microsoft takeover of Yahoo is dead from the perspective of both companies, but the same is not valid for the negotiations between the two giants. The Redmond and Sunnyvale based companies have re-entered talks at the end of the past week, announcing that they have discovered a common ground that would permit the creation of an anti-Google alliance on the same front.

"In light of developments since the withdrawal of the Microsoft proposal to acquire Yahoo Inc., Microsoft announced that it is continuing to explore and pursue its alternatives to improve and expand its online services and advertising business," Microsoft announced via a statement issued on Sunday May, 18. Initially, the Redmond giant offered $31 per share for Yahoo, namely $44.6 billion, on February 1, 2008, through an unsolicited acquisition proposal.

Yahoo's answer came on February 11 and involved not so much a "no," as an invitation to raise the initial bid. In the final stages of what turned out as failed negotiations, Yahoo's board of Directors were looking to obtain $5 billion more for the company than what Microsoft was willing to pay, namely no more than $50 billion. As a consequence, the Redmond company announced on May 3 that it was officially withdrawing its takeover bid. However, the Microsoft and Yahoo forced dance is evolving into an elegant ballet, where a partnership could yet take form.

"Microsoft is considering and has raised with Yahoo an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo. Microsoft is not proposing to make a new bid to acquire all of Yahoo at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo or discussions with shareholders of Yahoo or Microsoft or with other third parties," the Redmond company stated.

Microsoft, through its representatives failed to add anything extra to the official statement. Details are scarce at this point, but it seems that Microsoft is really after the eyeballs loyal to the Yahoo brand and its web properties. In this context a scenario in which the Redmond company would serve advertisements on Yahoo's infrastructure, and next to the Sunnyvale giant's search results.

"Yahoo has confirmed with Microsoft that it is not interested in pursuing an acquisition of all of Yahoo at this time. Yahoo and its Board of Directors continue to consider a number of value maximizing strategic alternatives for Yahoo, and we remain open to pursuing any transaction which is in the best interest of our stockholders. Yahoo!'s Board of Directors will evaluate each of our alternatives, including any Microsoft proposal, consistent with its fiduciary duties, with a focus on maximizing stockholder value," reads Yahoo's response to Microsoft's statement.

Microsoft emphasized the fact that even if the negotiations with Yahoo have entered a new stage, there is absolutely no guarantee that the two companies will be able to indeed agree on a common course of action. Or that a transaction will be finalized.



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