Posted by: Marshall Sponder | July 13, 2008

Yahoo! now wants the deal Microsoft offered them in the first place

What’s wrong with Yahoo!

Maybe it’s the Board of Directors, maybe it’s Jerry Yang, maybe it’s both of them – probably it’s the overall lack of leadership at Yahoo! but I could swear, and Danny Sullivan now points out, that the deal Yahoo! wants to do with Microsoft was the exact one they offered in the first place, last May … according to SearchEngineLand –  Yahoo Rejects Joint Microsoft/Icahn Deal But Open To $33 Per Share All-Microsoft Sale

I think Yahoo! did the right thing by buying IndexTools and (Yahoo! Analytics) but that’s the only thing I can think of recently, they did right.  Danny Sullivan details the recent history of the the Microsoft – Yahoo! negotations (see below):

  • First Offer – Microsoft Buys All Of Yahoo (Jan-May): Microsoft
    makes an offer
    to buy all of Yahoo on January 31, which is
    rejected about
    two weeks later.
  • Microsoft counters that
    it will pursue a hostile takeover, if necessary, and calls its proposal
    “full and fair.” By April, Microsoft gave Yahoo a three week deadline to
    accept its proposal. For its part, Yahoo
    started
    evaluating a paid search deal with Google. Meanwhile, Yahoo and Microsoft
    start negotiating a higher price for Yahoo. But the price wasn’t high
    enough for Yahoo, and Microsoft
    pulls the  offer in May.
  • Second Offer – Microsoft Buys Yahoo Search (June): Yahoo
    continued to negotiate a paid search deal with Google, while Carl Icahn
    started buying shares of Yahoo to launch a fight for control of the
    company. The general idea was that he’d get a new board in that would favor a deal
  • with Microsoft — that is, if Microsoft was still interested in Yahoo. AndMicrosoft was interested, given that it started talking directly to Yahoo.
  • This time, it wanted just Yahoo’s search assets. In the end, Yahoo chose to work
    with Google instead, keeping its search business but also carrying Google
    ads in addition to its own.
    Yahoo’s Google &
    Microsoft Deals, Side-By-Side
    explains both offers Yahoo considered,
    in some detail. By
  • Third Offer – Microsoft Buys Yahoo Search; Icahn Takes Control Of
    Yahoo (July):
    As covered above, Microsoft would get Yahoo’s search
    assets while Icahn would run Yahoo.

At this point, I have to wonder why Microsoft doesn’t go back and offer
Yahoo the price it wants for the entire, keep the search portion and divest
the rest to Icahn. Crucially, Yahoo apparently offered the entire company
for $33 per share, which was what Microsoft was willing to pay in May
(rather than trying to get the $37 per share that Yahoo wanted):

I think the reason why Yahoo! went back and forth is that Yang is a weak CEO, he could not make a strong case and sell the Board on his vision – and everything spiriled out of control.

Some people are just not cut out to be a CEO.

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