REDMOND, Wash., May 3 /PRNewswire-FirstCall/ -- Microsoft Corp.
(Nasdaq: MSFT) today announced that it has withdrawn its proposal to
acquire Yahoo! Inc. (Nasdaq: YHOO).
(Logo: http://www.newscom.com/cgi-bin/prnh/20000822/MSFTLOGO )
"We continue to believe that our proposed acquisition made sense for
Microsoft, Yahoo! and the market as a whole. Our goal in pursuing a
combination with Yahoo! was to provide greater choice and innovation in the
marketplace and create real value for our respective stockholders and
employees," said Steve Ballmer, chief executive officer of Microsoft.
"Despite our best efforts, including raising our bid by roughly $5
billion, Yahoo! has not moved toward accepting our offer. After careful
consideration, we believe the economics demanded by Yahoo! do not make
sense for us, and it is in the best interests of Microsoft stockholders,
employees and other stakeholders to withdraw our proposal," said Ballmer.
"We have a talented team in place and a compelling plan to grow our
business through innovative new services and strategic transactions with
other business partners. While Yahoo! would have accelerated our strategy,
I am confident that we can continue to move forward toward our goals,"
Ballmer said.
"We are investing heavily in new tools and Web experiences, we have
dramatically improved our search performance and advertiser satisfaction,
and we will continue to build our scale through organic growth and
partnerships," said Kevin Johnson, Microsoft president for platforms and
services.
Below is the text of the letter from Microsoft CEO Steve Ballmer to Yahoo!
CEO Jerry Yang.
May 3, 2008
Mr. Jerry Yang
CEO and Chief Yahoo
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089
Dear Jerry:
After over three months, we have reached the conclusion of the process
regarding a possible combination of Microsoft and Yahoo!.
I first want to convey my personal thanks to you, your management team,
and Yahoo!'s Board of Directors for your consideration of our proposal. I
appreciate the time and attention all of you have given to this matter, and
I especially appreciate the time that you have invested personally. I feel
that our discussions this week have been particularly useful, providing me
for the first time with real clarity on what is and is not possible.
I am disappointed that Yahoo! has not moved towards accepting our
offer. I first called you with our offer on January 31 because I believed
that a combination of our two companies would have created real value for
our respective shareholders and would have provided consumers, publishers,
and advertisers with greater innovation and choice in the marketplace. Our
decision to offer a 62 percent premium at that time reflected the strength
of these convictions.
In our conversations this week, we conveyed our willingness to raise
our offer to $33.00 per share, reflecting again our belief in this
collective opportunity. This increase would have added approximately
another $5 billion of value to your shareholders, compared to the current
value of our initial offer. It also would have reflected a premium of over
70 percent compared to the price at which your stock closed on January 31.
Yet it has proven insufficient, as your final position insisted on
Microsoft paying yet another $5 billion or more, or at least another $4 per
share above our $33.00 offer.
Also, after giving this week's conversations further thought, it is
clear to me that it is not sensible for Microsoft to take our offer
directly to your shareholders. This approach would necessarily involve a
protracted proxy contest and eventually an exchange offer. Our discussions
with you have led us to conclude that, in the interim, you would take steps
that would make Yahoo! undesirable as an acquisition for Microsoft.
We regard with particular concern your apparent planning to respond to
a "hostile" bid by pursuing a new arrangement that would involve or lead to
the outsourcing to Google of key paid Internet search terms offered by
Yahoo! today. In our view, such an arrangement with the dominant search
provider would make an acquisition of Yahoo! undesirable to us for a number
of reasons:
-- First, it would fundamentally undermine Yahoo!'s own strategy and
long-term viability by encouraging advertisers to use Google as opposed
to your Panama paid search system. This would also fragment your
search advertising and display advertising strategies and the ecosystem
surrounding them. This would undermine the reliance on your display
advertising business to fuel future growth.
-- Given this, it would impair Yahoo's ability to retain the talented
engineers working on advertising systems that are important to our
interest in a combination of our companies.
-- In addition, it would raise a host of regulatory and legal problems
that no acquirer, including Microsoft, would want to inherit. Among
other things, this would consolidate market share with the
already-dominant paid search provider in a manner that would reduce
competition and choice in the marketplace.
-- This would also effectively enable Google to set the prices for key
search terms on both their and your search platforms and, in the
process, raise prices charged to advertisers on Yahoo. In addition to
whatever resulting legal problems, this seems unwise from a business
perspective unless in fact one simply wishes to use this as a vehicle
to exit the paid search business in favor of Google.
-- It could foreclose any chance of a combination with any other search
provider that is not already relying on Google's search services.
Accordingly, your apparent plan to pursue such an arrangement in the
event of a proxy contest or exchange offer leads me to the firm decision
not to pursue such a path. Instead, I hereby formally withdraw Microsoft's
proposal to acquire Yahoo!.
We will move forward and will continue to innovate and grow our
business at Microsoft with the talented team we have in place and
potentially through strategic transactions with other business partners.
I still believe even today that our offer remains the only alternative
put forward that provides your stockholders full and fair value for their
shares. By failing to reach an agreement with us, you and your stockholders
have left significant value on the table.
But clearly a deal is not to be.
Thank you again for the time we have spent together discussing this.
Sincerely yours,
/s/ Steven A. Ballmer
Steven A. Ballmer
Chief Executive Officer
Microsoft Corporation
About Microsoft
Founded in 1975, Microsoft (Nasdaq: MSFT) is the worldwide leader in
software, services and solutions that help people and businesses realize
their full potential.
This release does not constitute an offer to sell or the solicitation
of an offer to buy any securities or a solicitation of any vote or
approval. This material is not a substitute for the prospectus/proxy
statement Microsoft Corporation would file with the Securities and Exchange
Commission (the "SEC") if an agreement between Microsoft Corporation and
Yahoo! Inc. is reached or any other documents which Microsoft Corporation
may file with the SEC and send to Yahoo! stockholders in connection with
the proposed transaction. INVESTORS AND SECURITY HOLDERS OF YAHOO! INC. ARE
URGED TO READ ANY SUCH DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION.
Investors and security holders will be able to obtain free copies of
any documents filed with the SEC by Microsoft Corporation through the web
site maintained by the SEC at http://www.sec.gov. Free copies of any such
documents can also be obtained by directing a request to Investor Relations
Department, Microsoft Corporation, One Microsoft Way, Redmond, Washington
98052-6399.
Microsoft Corporation and its directors and executive officers and
other persons may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information regarding
Microsoft Corporation's directors and executive officers is available in
its Annual Report on Form 10-K for the year ended June 30, 2007, which was
filed with the SEC on August 3, 2007, and its proxy statement for its 2007
annual meeting of stockholders, which was filed with the SEC on September
21, 2007. Other information regarding the participants in a proxy
solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in any proxy statement
filed in connection with the proposed transaction.
Statements in this release that are "forward-looking statements" are
based on current expectations and assumptions that are subject to risks and
uncertainties. Actual results could differ materially because of factors
such as Microsoft Corporation's ability to achieve the synergies and value
creation contemplated by the proposed transaction, Microsoft Corporation's
ability to promptly and effectively integrate the businesses of Yahoo! Inc.
and Microsoft Corporation, the timing to consummate the proposed
transaction and any necessary actions to obtain required regulatory
approvals, and the diversion of management time on transaction-related
issues. For further information regarding risks and uncertainties
associated with Microsoft Corporation's business, please refer to the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Risk Factors" sections of Microsoft Corporation's SEC
filings, including, but not limited to, its annual report on Form 10-K and
quarterly reports on Form 10-Q, copies of which may be obtained by
contacting Microsoft Corporation's Investor Relations department at (800)
285-7772 or at Microsoft Corporation's website at
http://www.microsoft.com/msft.
All information in this release is as of May 3, 2008. Microsoft
Corporation undertakes no duty to update any forward-looking statement to
conform the statement to actual results or changes in the company's
expectations.
SOURCE Microsoft Corp.
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