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Microsoft: Your Loss, Yahoo

In a last ditch effort to seal a deal, Microsoft said it offered to buy $8 billion worth of Yahoo shares at $35 each in addition to its search business, for another $1 billion. President Kevin Johnson revealed these details-which will no doubt place greater downward pressure on Yahoo CEO Jerry Yang-in a rhetoric-filled email to employees last week. "This partnership would have created a stronger competitor to Google, providing greater choice and innovation for advertisers, publishers and consumers,'' Johnson wrote, adding that Microsoft opposes Yahoo's search partnership with Google because the deal would secure more than 90 percent of the market for the search giant.

A Yahoo insider tells Bloomberg News that the Web giant turned down Microsoft's last-ditch offer because it undervalued both its search business and Yahoo as a whole. The insider adds that the offer would have locked Yahoo into an exclusive deal with Microsoft for 10 years while only yielding higher returns for three years.

Johnson, meanwhile, said Microsoft's offer for Yahoo's search business is still on the table, and would have added more than $1 billion to Yahoo's operating income in the first year of operation, as combining the search platforms would have reduced engineering and development costs. In total, the plan would have transferred $9 billion to Yahoo, Johnson said.



Read the whole story at Bloomberg News »

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