Search News Desk
Microsoft-Yahoo - Yahoo Dodges the Takeover Bullet As Microsoft Calls Off Bid
Full Text of Steve Ballmer's Letter to Chief Yahoo, Jerry Yang
By: .NETDJ News Desk
May. 5, 2008 05:45 PM
Here as a service to SYS-CON.com readers is the full text of the letter sent yesterday by Microsoft CEO Steve Ballmer to Yahoo CEO Jerry Yang.
May 3, 2008
Mr. Jerry Yang
After over three months, we have reached the conclusion of the process regarding a possible combination of Microsoft and Yahoo.
I first want to convey my personal thanks to you, your management team, and Yahoo's Board of Directors for your consideration of our proposal. I appreciate the time and attention all of you have given to this matter, and I especially appreciate the time that you have invested personally. I feel that our discussions this week have been particularly useful, providing me for the first time with real clarity on what is and is not possible.
I am disappointed that Yahoo has not moved towards accepting our offer. I first called you with our offer on January 31 because I believed that a combination of our two companies would have created real value for our respective shareholders and would have provided consumers, publishers, and advertisers with greater innovation and choice in the marketplace. Our decision to offer a 62 percent premium at that time reflected the strength of these convictions.
In our conversations this week, we conveyed our willingness to raise our offer to US$33.00 per share, reflecting again our belief in this collective opportunity. This increase would have added approximately another US$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 US$5 billion or more, or at least another US$4 per share above our US$33.00 offer.
Also, after giving this week's conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders. This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft.
We regard with particular concern your apparent planning to respond to a "hostile" bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo undesirable to us for a number of reasons:
We will move forward and will continue to innovate and grow our business at Microsoft with the talented team we have in place and potentially through strategic transactions with other business partners.
I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares. By failing to reach an agreement with us, you and your stockholders have left significant value on the table.
But clearly a deal is not to be.
Thank you again for the time we have spent together discussing this.
Steven A. Ballmer
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