Yahoo nears Google search deal; Icahn's plan goes kaput as Microsoft talks end

Yahoo nears Google search deal; Icahn's plan goes kaput as Microsoft talks end

Summary: Yahoo is reportedly near a search deal with Google and plans an unrelated reorganization. Meanwhile, Microsoft says it's no longer interested in Yahoo.

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Yahoo is reportedly near a search deal with Google and plans an unrelated reorganization. Meanwhile, Microsoft says it's no longer interested in Yahoo. Add it up and billionaire investor Carl Icahn's grand plan to cash in on Yahoo just went kaput.

First, the news. News.com's Stephen Shankland reports that Yahoo is near a search deal with Google (Techmeme). Update: Yahoo and Microsoft confirmed that talks have ended:

In a statement Yahoo said:

"Discussions with Microsoft regarding a potential transaction -- whether for an acquisition of all of Yahoo! or a partial acquisition -- have concluded."

Yahoo added that there were numerous meetings with Microsoft and the software giant indicated that it wasn't interested in the company "even at the price range it had previously suggested." Think $31 to $33 a share.

The company added:

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 reiterated that it is focused on maximizing shareholder value--a point Wall Street isn't buying.

Microsoft countered:

“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. This partnership would ensure healthy competition in the marketplace, providing greater choice and innovation for advertisers, publishers and consumers.

“As stated on May 3rd and reiterated on May 18th Microsoft was not interested in rebidding for all of Yahoo!. Our alternative transaction remains available for discussion.”

As a sidebar Yahoo plans a reorganization after the departure of Jeff Weiner, the executive vice president who runs Yahoo's network division.

The Google search deal--and Yahoo's penchant for it--has accomplished the following for better or worse:

Good times eh?

Wall Street was shooting Yahoo and asking questions later as shares fell more than 10 percent to $23.50 or so. Here's what happens when your biggest suitor calls it quits--again.

yhoochart1.png

Also see:

Topics: Social Enterprise, Browser, Cloud, Google

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16 comments
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  • What happens if...

    Icahn's slate wins (this is still a serious possibility) and MS still isn't interested in buying, or would only be willing at a greatly reduced price? I would think that Icahn would have no choice but to run Yahoo as an ongoing business, at least in the short term, to keep from losing too much of his investment (would serve him right).

    I would think that Icahn, experienced raider that he is, would have a contingency plan to deal with such a situation, but I guess that remains to be seen.
    John L. Ries
    • Ichan said day one

      he would not mind running Yahoo for awhile.

      But if his history tells us anything he will sell off pieces parts to get his moeny back, if he can find anyone willing to buy the pieces that is.
      No_Ax_to_Grind
      • Last phrase is the key

        I'm not sure the pieces are worth very much separately and they'd be worth even less without the people.
        John L. Ries
        • Given Yahoo has/is getting rid of people...

          with huge layoffs I don't know that the peopple side maters much.
          No_Ax_to_Grind
          • Some groups are hiring

            I have a friend that works in a group there that is heavily
            recruiting for Dev and QA. Don't know if that would be the
            most stable place to work, but you'd be getting in at a
            relatively low stock option price.
            marlon_jackson@...
  • MS has a price point....

    where it would by Yahoo. Icahn, if he wins the proxy fight would take considerably less. Any shareholder would go for it with just a reasonable profit on their investment. With the premium MS originally offered, they have a large amount to play with to complete a deal.

    Either way, Yang will be gone from the helm regardless of the proxy war's outcome. He made some very bad mistakes regarding his fiduciary duty to shareholders. He'll probably lose the numerous lawsuits filed against him and go away a broken man.

    Had he just made the deal with Microsoft, everyone would have walked away with more money in their pockets... except maybe for Microsoft.
    bjbrock
    • You sound so bitter ....

      and emotional over this.

      Did you simply want this all for MS? Are you tha big of an MS fanboy?

      It's actually debateable whether or not Yang did is proper "fiduciary duty". Remember, many of the institutional investors were behind him every step of the way. Also remember that just a little over a year ago Yahoo stock, along with everyone else's, was much higher, and MS made a higher bid back then. I'm sure that shareholders that bought Yahoo when it was higher weren't so eager to sell off Yahoo stock right now at a loss. IOW, it depends on shareholder perspective.

      Who cares anyway. Yahoo will be just fine as an independent, and has great potential with the new Google deal and upcoming products. And MS is probably better off without the nightmare of takeover logistics.

      It appears right now that Icahn is the only loser in this.

      To which I say, in Nelson from "The Simpsons" voice, Ha Ha!!
      super_J
  • Of course Google is glad to take what

    little income Yahoo generates.

    Yang is completely clueless.
    No_Ax_to_Grind
    • Yang isn't "clueless", he just doesn't want Yahoo destroyed

      Jerry Yang create Yahoo, and has significant personal as well as financial interest in maintaining the company.

      Icahn is a cold, ruthless corporate raider, who has zero concern for customers, employees, and the economy in general. His one and only interest is to make as much personal profit as he can, regardless of intangible costs.

      Frankly, the fact that you can't comprehend why Yang would not want to see the company he created disemboweled by a billionaire's corporate chop-shop suggests that you share Icahn's reptilian viewpoint.
      bmerc
  • Somehow that new Mercedes Dealership isn't like driving the ole Escalade.

    This has been like shooting pots at the marble club. On to Micro-micro, SQL, AT&T. Chi dow oo way. That is Merry Christmas I hope; for the greatful people of World at 3G Companies Globally.
    rtirman37@...
  • RE: Yahoo nears Google search deal; Icahn's plan goes kaput

    I think an independent Yahoo is better for everyone, including Microsoft, and excluding Carl Icahn (the corporate raider who just wanted a quick buck).
    super_J
    • No many interested in Yagoole!

      If Yahoo outsources search to Goggle, what's the point using Yahoo? What's the value of Yahoo then? People are using it because it's not Google or it provides alternative searches!
      joemartn
      • different things

        Yahoo is better as a portal, Google better as a search engine.

        Hopefully for Yahoo, the Google deal will give them a short term boost, while they get their own search engine improved (which reportedly they have been).
        super_J
      • Learn something about the Search Business before you open your mouth

        This comment is insightful only because it shows you have no idea of what this business or this development is about.

        YHOO is opening up its platform to let Google serve search-based ads that it wouldn't normally serve itself - both because the ads might be more relevant to the topics being searched for by YHOO users and because people bought the ads from GOOG and not YHOO so the only way for YHOO to make money off of those is to let GOOG place them on YHOO.

        It's not like YHOO is going to let Google completely take over its search engine - YHOO isn't letting Google serve its regular search results (um, though it USED to) - it's sell advertising space on YHOO to GOOG.

        That's a smart move in a world where "open platforms" is a key word and you might think creating a sort of online advertising exchange, in addition to your #1 Display and #1 Portal businesses. Google has neither of those, so this ought to be good for GOOG as well.

        SO, if you add one company's strengths to another's as a compliment, and you generate more value for shareholders, is that a bad thing? - Rhetorical Question - better answer is that maybe this time YHOO is actually doing something to create shareholder value.
        sculleratlarge
      • agreed

        I use yahoo because it gives different results, sometime more accurate and it seems I run into less unrelated advertising sites.

        It doesn't seem to be as easily 'scammed' as google is, or possibly just not as often.

        To be honest, I use Google most often to check the spelling of a word, (did you mean ????) or to do quick conversions metric-inch etc.

        Ken.
        merc2dogs`
  • Evil forces have prevailed

    in practically, if not totally, destroying Yahoo.

    Just as they have in censoring and muffling ZDNet. Might as well watch the CBS Evening News (using the term "News" very very loosely).
    Ole Man