Microsoft Gives Up on Yahoo Takeover Bid - Is it Really Over?
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Both sides insist that Microsoft's move is not yet another move in the merger dance, but a number of analysts are reluctant to rule that out. Jonathan Miller, the former chairman and CEO of AOL, thinks that this is "a very strong but serious negotiating tactic." And in mid-January, Oracle won a similar game of chicken with BEA Systems. Oracle walked away from the deal in October when BEA rejected Oracle's $17 per share bid and asked for $21 per share instead. Shareholder pressure pushed BEA back to the negotiating table, and Oracle agreed to a $19.38 per share price.
Could Microsoft be trying to do the same thing? Frankly, both sides face some serious pressure. Some observers think that Yang could be letting himself in for lawsuits for his role in the collapse of this deal. Shareholders have already filed seven lawsuits against the search engine since February 21, and the same company that is handling those suits is likely to be handling any more that crop up.
Meanwhile, Techcrunch and others are wondering if Steve Ballmer should leave Microsoft because the deal fell through - or if he'll be pushed out because the deal fell through. Indeed, Techcrunch cited insiders at the software giant as saying the man has been "more of a tyrant than usual," a sure sign that the stress has been getting to him. Maybe he's lost sight of what's important. On the other hand, if the deal is truly that important, how likely is it that Ballmer will let it go now?
Yahoo seems at least outwardly prepared to put the entire sordid affair behind it, however. The company is continuing to pursue search advertising deals with Google, and is talking with Time Warner about a merger with AOL. If that deal goes through, Time Warner will hold a 20 percent stake in the search engine.
But even there, Yahoo faces challenges. Kara Swisher interviewed about a dozen high-level Yahoo executives in the face of Microsoft's rejection, and found that many of them are not thrilled about a tie-up with AOL - and even less thrilled about losing the Microsoft deal. A number of them seemed to think it was time for a new CEO.
The next week will likely be telling for both companies. My crystal ball isn't working, but my guess is this won't be the last we hear about major search-related mergers in connection with Yahoo and Microsoft. Time alone will tell.
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