Bugger – Microsoft has withdrawn from the Yahoo takeover offer. Microsoft upped the price to $33 per share (from $29 odd), which was a $5 billion increase. Yahoo said “no thanks – we want $37 per share” and so Mirosfot walked away.
On Monday, US time, expect:
Yahoo’s shares to fall – and pretty far
Microsoft’s shares to rise, if not immediately, then over time..
In the next weeks we can expect some aggressive lawsuits from lawyers representing Yahoo shareholders, and some relieved Yahoo employees and executives.
After that it would not be surprising to see round 2.0 – with Microsoft coming back with another offer.
It was always a bad combination in business terms, but in financial terms the Yahoo board has just committed a cardinal sin – walking away from an offer that valued the company at substantially more than it is worth. They really have opened them and their insurers up for a mammoth lawsuit from shareholders, and it is hard to see a plausible defense.
Why “bugger” when the deal made no sense to customers? Because I’m short Microsoft shares – betting that they will fall. I thought that Ballmer would stick it out. However we should remember that Ballmer is a pretty good game theory practitioner, and so much more could happen.
Lance Wiggs 
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