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— Deals —
 The Yahoo!-Microsoft-Google saga tears on. Meanwhile, here comes Antitrust 2.0. June 5: Yahoo! nowhere near sealing Microsoft deal: We've been hearing about a search tie-up between Microsoft Corp. and Yahoo! Inc. for so long now that it'll be a big relief when a deal is actually announced. But it may be some time yet. - Olaf de Senerpont Domis June 3: Yahoo! CEO wishes she never heard of MSFT: Yahoo! chief executive Carol Bartz was quoted as saying , "I personally think we'd be better off if we never heard the word Microsoft." - Baz Hiralal Meanwhile, May 29: DOJ probes possible tech hiring pact: According to Washington antitrust lawyers, the Department of Justice antitrust division's networks and technology section, has sent letters to at least a dozen major computer hardware and software companies. Google Inc., Yahoo! and Apple Inc. are believed to be among the recipients, as is at least biotechnology firm, Genentech Inc. The letters suggest that antitrust division lawyers suspect that some of the targeted companies have agreed not to poach each others' employees. - Cecile Kohrs Lindell
Elsewhere, 'Face reality,' Blodget blasts Ballmer:
In a scathing critique of Microsoft's strategy, Henry Blodget tells
Steve Ballmer to stop comparing search to Windows. Spin Bing and MSN
into Yahoo!, advises Blodget. - Mary Kathleen Flynn
May 27: Yahoo!'s Bartz: We'd sell search for 'boatloads': Yahoo!'s Carol Bartz confirms that search talks are happening "a little bit" with Microsoft. - Olaf de Senerpont Domis May 26: Microsoft spends millions to challenge Google: At this week's All Things Digital conference, Microsoft is expected to announce a new search engine, dubbed Bing, and an ad campaign to go with it. Microsoft may also be positioning for a joint venture or acquisition; last week it registered a limited liability company in Delaware. - Baz Hiralal May 21: Yahoo! CTO guarantees acquisitions: Yahoo! has long said it needs to do more to tap into social networking. Chief technology officer Ari Balogh, at the the Reuters Global Technology Summit, said, "It's a good time to be buying now." - Baz Hiralal May 6: Apple, Twitter, Microsoft, Yahoo! deals?: Apple, Twitter, Microsoft and Yahoo! top the tech deal rumor-sphere Wednesday morning. Are deals near at hand, or is this all just a ploy to lure Internet traffic to tech blogs? - Mary Kathleen Flynn Meanwhile, April 30: Yahoo! Personals could be Bartz's next cut and April 23: Bartz's latest victim: GeoCities. The company is also reportedly auctioning HotJobs.com Ltd. and in March shuttered travel comparison site FareChase. April 21: Yahoo! net income drops 78%; Bartz wants company to 'kick ass': In a conference call, new Yahoo! CEO Carol Bartz described her first three months at the helm of the company as "amazing and busy." The call couldn't end without Bartz issuing a now-expected folksy turn of phrase. The best way to move Yahoo! forward despite a difficult economy is "creating kick-ass experiences for our users," Bartz said. - Olaf de Senerpont Domis Meanwhile, April 16: eBay to buy Gmarket for $1.2B: Online auction company eBay Inc. said it will pay up to $1.2 billion to buy South Korean rival Gmarket Inc. in a bid to expand its Asian operations. EBay said it secured agreements to purchase at least 67% of Gmarket's shares from investors including Yahoo! and Interpark Corp. and will make a general offer of $24 per share for the balance of the shares. - Donna Block On another Yahoo!-Microsoft deal, April 14: Ballmer could save Bartz $1B a year; April 10: Yahoo!'s Bartz and Microsoft's Ballmer talking; and March 4: Bartz to take Yahoo! negotiations private. March 2: Yahoo!'s 2008 legal tab: Yahoo! spent $79 million last year fending off Microsoft and wooing Google. - Olaf de Senerpont Domis SHAKING THINGS UP Feb. 27: Wall Street greets Yahoo! reorg; Feb. 26: Yahoo! CFO Jorgensen departs; Feb. 23: Yahoo!'s Bartz preps management shakeup; Feb. 12: Microsoft picks up another Yahoo! search pro. Jan. 27: Yahoo!'s Bartz: Search good, complexity bad: Carol Bartz just wrapped up her first quarterly conference call as Yahoo!'s new CEO and managed to deftly dance around the big questions facing the company, including what her plans are for Yahoo!'s search business. - Olaf de Senerpont Domis Jan. 28: Is a N.Y. Times-Yahoo! marriage pulp fiction?: Suggestions that Google should buy the ailing New York Times Co. have been floating around the blagosphere since last year. After the Times and Yahoo! Inc. announced expected sluggish earnings recently, would the two sides seriously consider the proposed hookup? - Gerald Magpily Jan. 13: Yahoo! taps Carol Bartz, the former CEO of Autodesk Inc., as chief executive. It didn't seem like an inspired choice, but the idea grew on investors. The news came days after Ballmer reiterated, again, the company is not interested in acquiring Yahoo! It came after the latest Microsoft-Yahoo! rumor surfaced. The story was among the big tech sagas of 2008. Back in December, Yahoo! felt shareholder pressure as job cuts, a CEO search and unhappy investors weighed on the struggling company. Nov. 25: Writing for The Deal at the time, David Shabelman and Alain Sherter examined Yahoo!'s M&A misfires: "The Internet company's fixation on search and integration problems have undermined deals," they wrote. Nov. 20: Days after Yahoo! said CEO Jerry Yang would step down, Yahoo! and Spanish language network Telemundo will dissolve their joint venture and Yahoo! will sell French shopping Web site Kelkoo SA to Jamplant Ltd. for less than $125 million, having paid $575 million for it four years earlier. Kelkoo's former CEO had some words for Yahoo! and its culture, which he blamed for the failed deal. Meanwhile, talks over Yahoo! Inc.-AOL LLC are reportedly ongoing. Nov. 18: Yahoo! needs a new chief executive, and The Deal's Tech Confidential did as analysts did, chiming in with possible picks. Nov. 17: Yang will step down and chatter of a deal with Microsoft Corp. may surface again. Yang drew harsh criticism over a failed $33 per share, $47.5 billion deal with Microsoft, a saga that has dragged on all year. Earlier in November: Microsoft's Ballmer just wasn't loving Yahoo! anymore, though the company was open to a search deal, which some argued Yahoo! shouldn't opt for. This, after Yahoo!'s ad pact with Google Inc. fell apart; the search giant pulled out as regulators prepared to block it. In October: One analyst suggests another Microsoft-Yahoo! scenario, that after posting a loss on it, Microsoft could sell its online business to Yahoo! This followed Yang's declaring he was still in charge and Yahoo!'s plan to lay off 10% of its workforce. Earlier in the month, analysts still expected a Microsoft-Yahoo! deal, Ballmer acknowledging it still made sense, and shareholder pleas for renewed talks. In September: The financial services downturn hit Yahoo!, the company's scenarios were still ugly, and some argued the feds were right to scrutinize a Google-Yahoo! ad deal. And in August, against the backdrop of a falling share price, Yahoo! was losing ground in search, while Yahoo!'s new board, which later became a study in lousy governance, finally took shape. Rounding out July, Yahoo! and Carl Icahn avoided what was sure to be a nasty proxy fight. The activist, who revealed he was buying up shares of Yahoo! shortly after Microsoft abandoned its pursuit of the company (for the first time), on July 21 won two Yahoo! board seats on the condition he end his proxy fight to replace the target's board. The board will be expanded to 11, Robert Kotick would not stand for reelection, and Icahn would join the board along with two of his nominees. Yang, whose ouster was central to Icahn's plan to replace the board with one that could successfully negotiate a Microsoft deal, will stay put, for now. It had looked like a proxy fight was going to come down Aug. 1, at Yahoo!'s annual shareholder meeting. Instead, shareholders elected the company's nominees. On July 12, Yahoo! again rejected a deal with Microsoft. The proposal would have given Microsoft its search business, while the Icahn board would have stepped in and taken over the rest of the company. It's just the latest in a string of proposals Yahoo! had shot down. It looked July 7 like talks
were back on. That development had Microsoft interested in
discussing a "major transaction" if the search giant replaced its
board. The confirmation came after Icahn -- the activist investor who
revealed having bought up a Yahoo! stake after Microsoft walked away
the first time -- sent a letter to shareholders urging them to vote to
replace the board Aug. 1 and support the replacement of Yang.
"In the end, Yahoo! Inc. [Yang] got what he wanted -- to remain in control of the company he co-founded -- while Microsoft Corp. will have to do battle with Google Inc. and Yahoo! alone," Shabelman and Laura Board wrote June 13. While this wasn't the end of the saga, it certainly marked an eventful first half of 2008.A shareholder suit and a heated exchange between Yahoo! chairman Roy Bostock and activist investor Icahn were the latest repercussions since Microsoft pulled its $47.5 billion bid for the search giant in May and Icahn bought up shares, denounced the stalled talks and waged a proxy contest. A recap:
Icahn on June 6 urged Yahoo! to set a $49.5 billion price
for a new Microsoft offer, days after blasting the company's severance
plan. Meanwhile, Sue Decker, Yahoo!'s president, said June 4 talks with Microsoft were ongoing, while Ballmer reiterated to little surprise June 3 his company's pursuit of Yahoo! was all about online ad revenue. Microsoft pulled its $47.5 billion takeover bid for Yahoo! May 3, and the two returned to the negotiating table two weeks later. The most buzzed about deal possibilities, The Deal's Baz Hiralal noted, then became search
advertising deals between Yahoo! and either Microsoft or Google. Gearing up for a proxy fight, Icahn signaled his willingness May 15 to invest up to $2.5 billion in Yahoo! and announced his slate of nominees. Yahoo! shot back the next day, but days later Icahn had won the support of fellow activists, namely T. Boone Pickens and Daniel Loeb. On May 3, Microsoft said it would end its quest to acquire Yahoo!, after its revised offer was rejected. Discussion boards were aflame with reactions to the deal that wasn't. Meanwhile, Yahoo shareholders began speaking out,
expressing their anger at Yahoo! leadership for being too defiant
against the Microsoft offer. Icahn said May 15 he was called upon by
other shareholders to lead the proxy contest. On The Deal's Tech Confidential, Andrea Orr considered the multiple challenges Microsoft faced, now that it had apparently eliminated one of the few partners that would have given it a decent chance to compete against Google. THE DEAL THAT WASN'T (AT LEAST NOT YET) In a letter May 2 to Yang, Ballmer wrote: "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." In the latest round of negotiations over the weekend, Yahoo! was able to exert some leverage with Microsoft after running a trial plan to outsource its search advertising results to Google the month before. Yahoo! suggested earlier in the week it could make the arrangement with Google more permanent and both companies attempted to refute arguments that such a combination would not fly with regulators. Yahoo! had reported first-quarter earnings April 22 that beat estimates. Shabelman noted that "to get a deal done on friendly terms and in a timely fashion, Microsoft might still need to sweeten its bid." The fight for Yahoo! looked like it was escalating April 10, with Microsoft trying to enlist News Corp. in its bid for the company, while the reluctant target, in turn, hoped to retain its independence through a tie-up with AOL, according to press reports. Board noted: The Redmond, Wash. software giant, which is under pressure to sweeten a [$31 per share] cash-and-stock offer for Yahoo! made in February, is in talks with Rupert Murdoch's media behemoth about launching a new bid, according to The Wall Street Journal and The New York Times. The development marks the realignment of News Corp., the owner of MySpace, which had flirted with a white-knight combination with Yahoo! Meanwhile, Yahoo! and Time Warner Inc.'s AOL are nearing a deal to combine their Internet operations, according to outlets including The Journal and Bloomberg. News of the plan, under which Time Warner would reportedly fold AOL into Yahoo! and make a cash investment in return for about a fifth of the enlarged company, comes a day after Sunnyvale, Calif.-based Yahoo! bolstered its defenses against Microsoft by announcing it will test an advertising alliance with Google Inc.That news came a day after it looked like an increase of $1 per share could clinch Yahoo! for Microsoft and Yahoo! continued its here-and-there dealmaking of late with a deal for Web analytics company Tensa Kft., better known as IndexTools. (All the while, Yahoo! has relied on a Skadden, Arps, Slate, Meagher & Flom LLP team in its dealmaking, as it tries to keep its would-be buyer at bay.) GETTING UGLY A spat erupted over the weekend of April 5, with Microsoft issuing an ultimatum to Yahoo! to agree to a deal in three weeks or the would-be buyer would go hostile. Yahoo!, in turn, said it was open to a deal, but at a better price. In late March, Yahoo! outlined a rosy plan for the future, which raised some eyebrows, just weeks after digging in its heels, saying it would extend the deadline for nominating directors to its board from March 14 to 10 days after the public announcement of its annual meeting date. In 2007, it was on June 12. Shabelman noted: Yahoo! said the move gives stockholders who wanted to nominate board candidates more time to do so and allows its board to continue exploring strategic alternatives without the distraction of a proxy fight while simultaneously hampering Microsoft's ability to build any momentum for a board takeover.February was busy, as well:
Microsoft's offer came a year after preliminary talks between the two subsided, and Yahoo! embarked on a turnaround -- one that in the months and weeks leading up to the offer, proved insufficient to appease investors and critics. As Dealscape's George White noted Feb. 1, Microsoft's bid could actually help Google the very force the two were vying against. If Yahoo! were to angle for a higher price, Microsoft and Yahoo! would spend time duking it out over an agreement, rather than focusing on the competition. And if they do agree to merge, he noted, integration will certainly not be an easy task. Microsoft's last major score was a $240 million investment in Facebook Inc., which valued the wildly popular social networking site at $15 billion. Google challenged the Microsoft-Yahoo! proposition Feb. 3 charging Microsoft was trying to monopolize the Internet, just as it had PC operating systems. The search giant's CEO Eric Schmidt also reached out to Yahoo! CEO Jerry Yang, calling him to offer help in fending off Microsoft, according to a Wall Street Journal report Feb. 4. With other takes on the news, Shabelman noted that other bidders were not expected to top Microsoft's $31 per share offer, and Andrea Orr pointed out that acquiring Yahoo! would give Microsoft one-fourth of the online display ad market. JANUARY BUZZ The target's shares saw a precipitous slide over the last year, losing nearly 32% of their value as Google had steadily eroded Yahoo!'s market share. Yahoo!'s shares were up nearly 47.3% to $28.24 Friday morning, Feb. 1. Microsoft shares were down more than 5% to $30.95. Overall, the news boosted the stock market. Dow Jones Industrial average futures jumped 100 points within minutes of the announcement. See more coverage from Dealscape. Earlier in the week it had become clear all patience was lost on the part of Yahoo! investors, as critics said it had failed to articulate a viable turnaround plan and the likelihood of a takeover became even greater, Shabelman pointed out. Visit the complete Dealwatch Archive |
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