As Microsoft Walks Away,Yahoo Enters Google Ad Pact: WSJ

Moves May Prompt
Industry Scramble,
Regulator Scrutiny
By MATTHEW KARNITSCHNIG and JESSICA E. VASCELLARO
June 13, 2008; Page B1

Microsoft Corp. abandoned its pursuit of Yahoo Inc., opening the way for Yahoo to complete a search-advertising pact with rival Google Inc. that pits the industry's two biggest forces against Microsoft.

Microsoft told Yahoo that it was no longer interested in pursuing a takeover, even at the $33 a share it offered for the Internet company last month. That price would have valued Yahoo at nearly $50 billion.

Microsoft also unsuccessfully floated an alternative proposal to acquire Yahoo's search business. It isn't clear how Microsoft valued the business, but as part of that deal, Microsoft said it was prepared to acquire an additional 16% of Yahoo for $35 a share, or about $7.73 billion, according to people familiar with the situation.

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