It’s official, Microsoft (MSFT, $29.24, down $0.16) has withdrawn it for Yahoo ($28.67, up $1.86). After going as high as $33 a share, Yahoo held out for $37 which Microsoft simply felt was too high. Microsoft’s decision to walk away from the table came Saturday after last-minute efforts to negotiate a mutually acceptable deal. I sensed Yahoo was going to be stubborn and that was questioned after Microsoft raised its bid late Friday. However, when it was all said and done Yahoo stuck to its guns as did Microsoft.
Here is what Microsoft’s CEO, Steve Ballmer had to say, “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.”
Yahoo’s Jerry Yang’s response, “With the distraction of Microsoft’s unsolicited proposal now behind us, we will be able to focus all of our energies on executing the most important transition in our history.”
It was a surprise ending and I compared the drama to a script out of Hollywood. And we all know how Hollywood works. This story is bound to have another sequel (Microsoft tried to buy Yahoo once before) so we could see a “Microsoft/ Yahoo 3”.
As for now, there will be interesting subplots. What happens to Yahoo’s stock price? Is something in the wings with Google? If Yahoo’s stock drops back into the teens will Microsoft start buying shares in the open market? Does Microsoft look elsewhere for a partner…ValueClick (VCLK, $19.93, down $0.19)?
One thing is for certain come Monday. All three stocks will be very active.