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Deadline Passes with No Deal Struck: Will Microsoft Continue to Fight for Yahoo?

Three months ago Microsoft made an unsolicited $44.6 billion bid for Yahoo Inc., and today they are no closer to acquiring the company than they were then.  On Saturday, the deadline passed for Yahoo to accept Microsoft’s bid.  They did not accept, and now Microsoft is left in a quandary: are they still worth pursuing?

Negotiations remain in a deadlock, with Yahoo’s board refusing to sell for less than $45 billion.  Having passed up on Microsoft’s takeover offer, analysts have predicted that Microsoft will either beef up their offer, or attempt to replace Yahoo’s board with directors more favorable to a takeover.  But now it seems that Microsoft may be signaling that they will abandon their efforts to acquire Yahoo.

Chief Executive Officer Steve Ballmer and Chief Financial Officier Chris Liddell have made public statements which seem to indicate that they’re ready to walk away from the table.  That may in fact be their intentions, or it could be a devious ploy to pressure Yahoo into making a decision more quickly.

Even if Microsoft decides to walk, that doesn’t mean necessarily that the fight is over.  One possible scenario is that they could lie low for a bit, and then come back with a bid later this summer, after Yahoo has had more time to spin its wheels and think it over.  But the chances of that working hinges on Microsoft’s belief that the company is in a downward slide being true.  If Yahoo is able to make a comeback, through a partnership with Google and other ventures, then a bid from Microsoft later this summer might also be rebuffed.

Will Microsoft abandon their efforts to acquire Yahoo?  Will Yahoo continue to stick it out on their own?  Right now, only time will tell.  Microsoft, however, is expected to reveal their intentions early this week.

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