Yahoo: Microsoft doesn't want us anymore
Updated 12:05 p.m. with Yahoo confirming talks concluded; 12:45 p.m. with additional details, Microsoft comment.
Microsoft's efforts to reach some sort of arrangement with Yahoo have broken down again, Yahoo confirmed on Thursday.
The search company said that, at a meeting on June 8, Microsoft indicated that it is no longer interested in Yahoo even at the $33 a share it had previously said it was willing to pay.
"The conclusion of discussions follows numerous meetings and conversations with Microsoft regarding a number of transaction alternatives, including a meeting between Yahoo and Microsoft on June 8, in which Chairman Roy Bostock and other independent Board members from Yahoo participated," Yahoo said in a statement. "At that meeting, Microsoft representatives stated unequivocally that Microsoft is not interested in pursuing an acquisition of all of Yahoo, even (in) the price range it had previously suggested."
Yahoo said it also decided that a search-only deal with Microsoft is not in its best interest. "With respect to an acquisition of Yahoo's search business alone that Microsoft had proposed, Yahoo's board of directors has determined, after careful evaluation, that such a transaction would not be consistent with the company's view of the converging search and display marketplaces, would leave the company without an independent search business that it views as critical to its strategic future, and would not be in the best interests of Yahoo stockholders."
Yahoo's shares dropped more than 12 percent following the news, changing hands recently at $23.05, down $3.10.
The announcement comes as Yahoo and Google are set to announce a search deal of their own, according to a source familiar with the situation.
Microsoft said in a statement that it although it is not interested in renewing its bid for Yahoo, "our alternative transaction remains available for discussion."
"In the weeks since Microsoft withdrew its offer to acquire Yahoo, the two companies have continued to discuss an alternative transaction that Microsoft believes would have delivered in excess of $33 per share to the Yahoo shareholders," Microsoft said. "This partnership would ensure healthy competition in the marketplace, providing greater choice and innovation for advertisers, publishers and consumers."
Just ahead of Yahoo's formal announcement, The Wall Street Journal reported on its Web site that talks had broken down Microsoft's public position for some time has been that it was no longer interested in an outright acquisition, though executives said the company was "reserving the right" to renew its bid.
Yahoo had originally hoped to make its announcement after the markets closed and in conjunction with its Google advertising deal, a separate source told CNET News.com.
"The hope was to announce them together to help (cushion) the stock," the source said.
During the weeks that Microsoft and Yahoo have been discussing alternative deals, at no point did Microsoft offer any buyout price--at any price, noted the source.
Yahoo, which is trying to fend off a proxy fight from Carl Icahn, will be embarking on a road show with investors and would have likely felt some pressure from shareholders to explain where things stood with Microsoft. However, the source said that the announcement was not timed because of the road show.
Microsoft went public with a $31-per-share offer for Yahoo on February 1, but it was rebuffed. In May, it indicated its willingness to go up to $33 per share, but it pulled its bid on May 3. The companies later said they were in talks on a deal short of an acquisition, though Yahoo also said it continued to pursue its talks with Google.
News.com's Dawn Kawamoto contributed to this report.