This is what Yahoo turned down
The broken deal between Yahoo! and Microsoft has been talked a lot about. But what did Yahoo! really turn down? Quit a lot, if we look at the e-mail of Microsoft's ‘President Platforms and Services’ of Kevin Johnson (yes the same one who was going to run Yahoo). In an e-mail to Microsoft employees he revealed what Yahoo had turned down. Amongst other things that was:
- An investment in Yahoo! off 8 billion dollars, 35$ per share
And a lot more cash...
Read the entire e-mail:
I wanted to take an opportunity to provide my thoughts and perspective on the conclusion of our discussions with Yahoo!, and its announcement of a commercial agreement with Google.
Let me share a little background with you. When we made our original proposal on February 1st to combine with Yahoo!, we offered a 62 percent premium that was based on a desire to reach an agreement in short order. The faster we could reach an agreement, the sooner we could begin the regulatory process and create value through this combination.
In a March 10th meeting in Palo Alto, we explained to Yahoo! management the importance of reaching an agreement by the end of April in order to have an opportunity to complete the regulatory process by the end of this calendar year. Because we could not come to an agreement on price by the end of April and given our concerns about Yahoo!’s business performance, we elected to withdraw our bid and pursue better options for Microsoft.
During the last few weeks, we spent a considerable amount of time with Yahoo! discussing an alternative proposal around search. Specifically, this search proposal had three components:
This partnership would have created a stronger competitor to Google, providing greater choice and innovation for advertisers, publishers and consumers. This approach could have been implemented quickly and would have simplified the integration process for both parties. It would have also established the basis for a long-term Internet partnership between Yahoo! and Microsoft.
We believe this proposal would have created compelling value for Yahoo! and its shareholders in at least three ways:
Taken together, we believe that our proposal would have created total value for Yahoo!’s shareholders in excess of $33 per share.
Unfortunately Yahoo! has chosen a different course, and yesterday announced an agreement that would start to consolidate over 90 percent of the paid search advertising market in Google’s hands. This will make the market far less competitive. There are many experts who suggest that a host of legal and regulatory problems lie ahead for Google and Yahoo!.
Regardless of Yahoo!’s decision, we will continue to move forward on our strategy in online services and advertising.
Since my mail on May 18, we have been making great progress. At our advance08 conference, we announced Live Search cashback and Live Search Farecast, and the initial response to these user experience and business model innovations in search has been very positive. On June 2nd, we also announced a distribution deal with HP, the world’s largest PC manufacturer, to install a Live Search-enabled toolbar on all HP consumer PCs planned to ship in the United States and Canada, beginning in January 2009.
We look forward to sharing more milestones and details on our plans as we head to MGX and our Financial Analyst Meeting in July.
I remain confident in our assets, plans and people to succeed in building our online business. Thanks again for your commitment and focus.
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