Microsoft Now Says Yahoo Came Crawling To Them (Again)
Posted by Erick Schonfeld in BLOGROLL, CREATIVITY, MEDIA, MOBILE
After Yahoo quickly rejected Microsoft’s latest offer to buy its search business this weekend, Microsoft has just issued its own statement in the “he-said, she-said” wars playing out in public between the two companies.
According to Microsoft, after talking to investor Carl Icahn, Yahoo chairman Roy Bostock basically came crawling on his knees to Microsoft CEO Steve Ballmer indicating that better guarantees could revive the search-only deal. (Yeah, right). Microsoft came back with a proposal that ” significant revenue guarantees, higher TAC rates, an equity investment and an option for Yahoo! to extend the agreement over a 10 year period.”
The deal broke down, partly because of Yahoo’s belief that it had to take it or leave it within 24 hours. Microsoft denies ever setting a 24-hour deadline. (Maybe Carl Icahn did?) Whatever happened, it sounds like some lines got crossed there with all the telephone tag. But what do you expect when you have a three-way negotiation going on?
Below is Microsoft’s statement:
Microsoft Sets the Record Straight
REDMOND, Wash. – July 14, 2008 - On the evening of July 12, Yahoo! Inc. released a statement relating to recent discussions involving Yahoo!, Microsoft Corporation, and Carl Icahn. Microsoft believes the statement contains inaccuracies that need to be corrected. Among other things, the enhanced proposal for an alternate search transaction that we submitted late Friday was submitted at the request of Yahoo! Chairman Roy Bostock as a result of apparent attempts by Mr. Icahn to have Microsoft and Yahoo! engage on a search transaction on terms Mr. Icahn believed Microsoft would be willing to accept and which Microsoft understands Mr. Icahn had discussed with Yahoo!.
Specifically, on Thursday afternoon, July 10, Mr. Bostock called Steve Ballmer’s office to arrange a call. On that subsequent call, Mr. Bostock told Mr. Ballmer that “with substantial guarantees on the table and an increase in the TAC (traffic acquisition cost) rate, there are the pillars of a search only deal to be done.” Mr. Bostock encouraged Mr. Ballmer to submit a new proposal to Yahoo! for a search only deal reflecting these terms.
After considering Yahoo’s request and taking into account Yahoo’s previous feedback about our prior search proposal, Microsoft determined late Friday to propose an enhanced search transaction. This proposal included significant revenue guarantees, higher TAC rates, an equity investment and an option for Yahoo! to extend the agreement over a 10 year period.
Microsoft’s proposal did not include changes to Yahoo’s governance.
At the time Microsoft submitted its enhanced proposal, Microsoft asked that Yahoo! confirm whether it would agree that the enhancements were sufficient to form the basis for the parties to engage in negotiations over the weekend on a letter of intent and more detailed term sheets. This discussion has been mischaracterized as a take it or leave it ultimatum, rather than a timetable in order to move forward to intensive negotiations. Yahoo! informed Microsoft on Saturday that it had rejected the proposal.
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