Microsoft May Bid for Yahoo (MSFT, YHOO)
On October 5, 2011, Reuters reported that Microsoft Corp. (NASDAQ:MSFT) was weighing a fresh bid for Yahoo Inc. (NASDAQ:YHOO), three and a half years after its first attempt collapsed. The report cited a senior Microsoft executive speaking anonymously, who said any offer would most likely be made together with a partner rather than by Microsoft alone.
Yahoo had been in play since September 6, when its board fired chief executive Carol Bartz and installed finance chief Tim Morse as interim CEO. The company then hired Allen & Co. and Goldman Sachs to run a strategic review, and a queue of potential suitors formed: several private equity firms, and Alibaba Group, the Chinese e-commerce company in which Yahoo held a roughly 40 percent stake. Alibaba chairman Jack Ma, asked at Stanford on September 30, said he would be “very interested” in buying Yahoo.
Yahoo shares jumped about 10 percent on the day of the report. The company’s market value at the time was less than half what Microsoft had offered in 2008.
That history weighed on the discussion. In February 2008, Microsoft made an unsolicited offer of $44.6 billion, or $31 a share, and later raised it to $33. Yahoo’s board, led by co-founder Jerry Yang, held out for more, and Microsoft walked away in May 2008. Yang stepped down as chief executive later that year, and the two companies settled for a 2009 search partnership under which Microsoft’s Bing powered Yahoo’s search results.
Inside Microsoft, the executive told Reuters, opinion was split: some argued Yahoo’s value “hasn’t grown in years” and that the company should “buy something that is more forward-looking,” while proponents saw a chance to fold a rival portal into MSN and Bing. Any combination would also have drawn regulatory attention, since Bing and Yahoo together held roughly 30 percent of U.S. search.
What happened next. Microsoft never made the bid. By November 2011 it was reported to be considering backing a private-equity-led offer instead, and that too went nowhere. Yahoo stayed independent, hired Scott Thompson as CEO in January 2012 and Marissa Mayer that July, and finally sold its core internet business to Verizon in 2017 for $4.48 billion — a tenth of what Microsoft had offered in 2008.