Microsoft now plans to buy Yahoo! search business >>>

News emerged that the Microsoft proposal to Yahoo! would be to buy its search business and have the portal keep its content operations and sell its foreign investments.

Earlier this month, Microsoft walked away from the proposal to acquire Yahoo for $47.5 billion, or $33 per share,after Yahoo rejected the offer, saying it would only settle for $37 a share.

Microsoft Corp Chief Executive Steve Ballmer said on Friday that buying Yahoo was not a strategy in itself, and dropping the bid meant it now had $50 billion to spend on other acquisitions.

"Yahoo was never the strategy we were pursuing, it was a way to accelerate our online advertising business," he told a packed hall at a technology conference in Moscow.

"We will spend money on some acquisitions. You can do a whole lot of things with 50 billion dollars," he said.

Now Microsoft has made an alternative offer, proposing to buy Yahoo's search business and take a minority stake in the web firm.
As part of the deal, Yahoo would put its Asian assets, including significant minority stakes in yahoo Japan and china's Alibaba Group, up for sale , while Microsoft would buy a chunk of that which remains of the company.

The new deal, if completed would forge an alliance between the two companies that would represent an alternative means of competing with rival Google.

Finally Microsoft abort yahoo acquisition proposal

In the beginning of 2008, Microsoft had
made an unsolicited offer to buy Yahoo
for $44.6 billion. Transaction valued at approximately $31 per Share for Yahoo that means 62 percent premium to current trading price for Yahoo! shareholders. But Yahoo later rejected the offer saying Microsoft’s bid ‘substantially undervalued’ the company. Recently, Microsoft raised its bid by about $5 billion but now it appears that Yahoo wanted Microsoft to further raise its bid by another $5 billion or more, raising the acquisition size to about $55 billion.

“We have great respect for Yahoo!, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market,” said Steve Ballmer, chief executive officer of Microsoft. “We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners.”

So it is clearly that with Yahoo acquisition Microsoft wanted to compete with search giant Google.

“We clearly indicated to Microsoft that we were open to a transaction but only if it were on terms that fully recognized the value of Yahoo and was in the best interests of our stockholders,” Jerry Yang, CEO, Yahoo, has said. “With Microsoft’s withdrawal, we will be better able to focus our energy on growing our industry leadership and maximizing value for stockholders.”

Steve Ballmer, chief executive officer, Microsoft, has said, “Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo has not moved toward accepting our offer. 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.”

Lets watch Microsoft next move...........to conquer the online world.