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San Francisco: Microsoft walked away from its bid to buy Yahoo on Saturday after the internet company turned down its offer to raise the price by $5 billion to $47.5 billion.
Microsoft's offer was for $33 a share but Yahoo would not lower its demand below $37, Microsoft chief executive Steve Ballmer said. The software company initially bid $31 per share for Yahoo more than three months ago.
"We believe the econ-omics 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," Ball-mer said in a statement.
Analysts say Yahoo has overplayed its hand and they expect the web pioneer's shares to fall as much as 30 per cent to $20 levels when Nasdaq trading resumes today.
The stock rose nearly seven per cent to $28.67 on Friday on hopes of an agreement between Microsoft and Yahoo.
Reactions
"Wow. I'm shocked Yahoo wasn't more reasonable. The stock will probably go down at least $5 today. It is surprising that Ballmer walked away instead of trying a hostile bid at $33," said Walter Price, a senior portfolio manager at RCM fund management company in San Francisco, which had 21 million Microsoft shares and two million Yahoo shares as of the end of December.
Laura Martin, a senior analyst at Soleil Securities, said she expected a number of shareholder lawsuits against Yahoo.
"The Yahoo guys want too much money for their company. We think $33 a share is fair in the context of the weakening economic environment and adverse advertising trends," she said.
"They've prioritised employees over shareholders in the hopes that someday they can create more than $8 billion of value, even if they have no track record of doing so," she said.
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