Sunnyvale-based Yahoo Has Refused Microsoft's Latest Deal

Finally, Sunnyvale-based Yahoo has rejected Microsoft's latest attempt to control its online search business in a "take it or leave it" proposal. According to Yahoo, Microsoft packaged its latest offer with activist investor Carl Icahn, a billionaire who is seeking to overthrow Yahoo's board of directors in a shareholder meeting scheduled for August 1.

Yahoo received the complex proposal Friday and it was given less than a day to respond. Moreover, Yahoo said that without providing many specifics, Microsoft renewed an earlier bid to control the company's search engine and proposed turning over the remaining pieces to a board controlled by Carl Icahn.

Roy Bostock, a chairperson of Yahoo, said that Microsoft has taken the "irresponsible and completely absurd" stance of refusing to hold any further talks with Yahoo's current board and management. However, Microsoft did not immediately respond to a request for many comments late Saturday. Icahn's efforts were unsuccessful.

According to Yahoo, it not worthy to sell the entire company to Microsoft for US$47.5 billion, or US$33/share, a bid that the software maker dangled in early May before withdrawing it in a pique over Yahoo CEO Jerry Yang's demand for US$37/share. However, Yahoo has not explained why it finds a sale at US$33/share to be more palatable now than it was a little over two months ago. On the other hand, Microsoft has no longer interested in buying Yahoo in it is entirely unless Icahn's board is on the other end of the negotiations.

It seems that instead of selling its search engine to Microsoft, Yahoo more likely to build a partnership with its rival Google. However, it seems that a bit of irony, because Google's dominance of the Internet search ads market is the primary reason that Microsoft is pursuing Yahoo. As Google has become more successful, both Microsoft and Yahoo have been regressing, a dynamic that many analysts believe make it imperative for the two companies to put aside their differences and combine forces.

On the other hand, Yahoo has estimated that it can boost its annual revenue by about US$800 million by relying on Google's superior technology to show some ads alongside the search results on its website.

Other useful resource: A New Microsoft Deal Rejected by Yahoo

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