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Steve Ballmer said the deal would happen if the circumstances were right, that it wouldn’t if they were wrong.  He said walking away was an option.  He wasn’t kidding. 

Shocking many analysts who predicted a deal was likely or, at the least, a hostile takeover was the next step if no agreement was reached, Microsoft pulled the plug on their efforts to acquire Yahoo.

The reversal followed a face to face meeting in Seattle between Steve Ballmer and Jerry Yang, Saturday morning.  People familiar with the negotiations said Microsoft had increased its offer to $33, a share ($47.5 billion) but that Yahoo was unwilling to accept anything less than $37.

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Saturday,  Microsoft withdrew their bid to acquire Yahoo.  What follows is a reprint of  CEO Steve Ballmer letter to Jerry Yang and then Yahoo’s reply. 

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In early April, Microsoft issued Yahoo an ultimatum.  By April 26th, one way or another, Microsoft pledged, there’d be a decision.  Either Yahoo would accept, Microsoft would take their buyout offer to the shareholders, or they’d walk. Something would happen.  April 26th, along with earnings announcements from all relevant players, came and went.  The ultimatum deadline rang out with all the import of a fire drill in an empty building.

Today, its five days since the deadline’s expiration and we’re still waiting. When I searched for Yahoo with a Google News Search, I found 498 articles linked to the first hit.    That’s a lot of baited breath.

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Last week, Apple made a tiny debit from their enormous cash reserves to buy small semi conductor design firm PA Semi.  At approximately $278m, the deal barely shifts the multi billion dollar cash account on the balance sheet; still it has left many analysts, watchers and writers asking questions.  The first and most obvious is “why?” Why did a company that favors buying companies in the early stages of development buy a company with an established customer list? And why given Apples’ focus and success with consumer-focused products choose to invest in the challenging and cyclical semiconductor industry?

Another more macro set of questions (in a companion post to this article) query whether the deal represents a possible shift in Apple’s acquisition policies.  Was this the start of a more acquisition friendly Apple; one interested in taking advantage of weaknesses in the current financial markets to fortify underlying tech assets?

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Looking at Apple’s purchase of Palo Alto Semiconductor (PA Semi) opened the door to two core questions.  One, the micro look, questioned what Apple’s specific interests in the company were.   Why did they make the purchase?   Part 1 of this two part article series delved into that question in detail.  The second question is a recurring issue and more macro in focus: does this small scale purchase give any indication of a change in Apple’s M&A strategy? 

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It’s all systems go for the combination of Vivendi Games and Activision.  Wednesday, the companies got the go ahead from European regulators.  Officially, the European Commission will not move to block the deal for antitrust reasons.

The antitrust evaluation was conducted as part of a routine investigation following the proposed merger’s  December announcement.  There was little likelihood of a regulatory blockade but the size of the two companies, and the behemoth the merger would create, was sufficient for the European regulators to take caution to insure it would not negatively influence competition in the industry. 

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In the past few months, shareholders have gotten especially active in pushing their corporate boards to act as they wish.  Carl Icahn squeezed Motorola to a new Chairman and an eventual breakup plan.  Electronic Arts has Take Two by the collar. Microsoft is chasing Yahoo.   It used to be proxy fights and hostile takeovers were rare but now the rules are changing.  The rough games are becoming common and they seem to be looming like a scripted sequel to Oliver Stone’s Wall Street.   Is something in the water on Wall Street?    

Today, just when it seemed more surprises were unlikely, up popped Blockbuster with a billion dollar Gordon Gecko maneuver of their own. Click to Read More