Yahoo Turned Down $44.6 Billion From Microsoft
Zusammenfassung
On February 1, 2008, Microsoft offered to acquire Yahoo for $31 per share — a total of approximately $44.6 billion, a 62% premium over Yahoo’s closing price. Yahoo’s board rejected the offer as “significantly undervaluing” the company. Microsoft withdrew after three months of negotiations. Nine years later, Verizon acquired Yahoo’s core internet business for $4.83 billion — roughly 11 cents on the dollar compared to the Microsoft offer. Yahoo’s rejection is considered one of the most consequential corporate decisions in technology history.
The Offer
By 2008, Yahoo was struggling. Google had decisively won the search advertising market. Yahoo’s display advertising business was stagnant. Jerry Yang, Yahoo’s co-founder, had returned as CEO in 2007 to turn the company around.
Microsoft’s offer was generous by any reasonable metric: a 62% premium over market price, in cash and stock, backed by Microsoft’s balance sheet. Microsoft’s strategic rationale was clear — combined with Yahoo’s audience and search data, Microsoft could credibly challenge Google’s dominance in online advertising.
Yahoo’s board, under pressure from activist investors who wanted to accept the deal, commissioned investment banks to value the company. The board unanimously concluded the offer was inadequate and sent a formal rejection on February 11, 2008.
The Aftermath
Microsoft raised its offer and extended negotiations over three months. Yahoo refused to engage seriously. On May 3, 2008, Microsoft withdrew.
Yahoo’s stock price fell immediately. Over the following years, the company’s position deteriorated further. It made a series of failed strategic bets, including turning down an early acquisition of Google itself in 2002 for $3 billion and declining to buy Facebook in 2006 for $1 billion.
In 2016, Verizon agreed to acquire Yahoo’s operating business for $4.83 billion. The final sale price was reduced further to $4.48 billion after Yahoo disclosed two massive data breaches affecting 3 billion user accounts.
Jerry Yang resigned from Yahoo’s board in 2012. The $44.6 billion that Yahoo refused became the benchmark against which every subsequent valuation was measured.