Microsoft Makes Yahoo an Offer They Can (and Do) Refuse

Yahoo on Saturday announced that it has rejected yet another offer from Microsoft, this one a "ludicrous" deal in which Microsoft would purchase Yahoo's search business and then cede the control of the rest of the company to billionaire investor Carl

Paul Thurrott

July 12, 2008

2 Min Read
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Yahoo on Saturday announced that it has rejected yet another offer from Microsoft, this one a "ludicrous" deal in which Microsoft would purchase Yahoo's search business and then cede the control of the rest of the company to billionaire investor Carl Icahn. Microsoft described the deal as a "take it or leave it" offer and gave Yahoo 24 hours to respond. Not surprisingly, Yahoo immediately rejected the offer.

"This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo's stockholders in mind," Yahoo chairman Roy Bostock wrote in a release. "While this type of erratic and unpredictable behavior is consistent with what we have come to expect from Microsoft, we will not be bludgeoned into a transaction that is not in the best interests of our stockholders."

According to the terms of the Microsoft deal, Yahoo would sell its search business to the software giant and then replace its current board of directors with a slate of directors picked by Icahn. It's hard to imagine a scenario in which Yahoo would accept such an offer. Clearly, what was really happening is that Microsoft was providing Yahoo shareholders with a look at the future they envision for the company should they decide to back Icahn's efforts to oust the Yahoo board.

The offer was also designed to be directly insulting to the Yahoo board, which Microsoft has described as being self-protectionist while not working on behalf of the best interests of shareholders. In fact, Microsoft says it now refuses to deal directly with the current Yahoo board at all. With Microsoft now explicitly backing Icahn and showing it is still serious about acquiring at least part of the Internet company, Yahoo shareholders may have the final impetus they need to make major changes.

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About the Author

Paul Thurrott

Paul Thurrott is senior technical analyst for Windows IT Pro. He writes the SuperSite for Windows, a weekly editorial for Windows IT Pro UPDATE, and a daily Windows news and information newsletter called WinInfo Daily UPDATE.

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