Microsoft reveals exactly what Yahoo turned down

All the dirty details published

14 June 2008 11:44 GMT / By Katie Scott

Yahoo has now resolutely walked away from talks with Microsoft ending (probably) a saga that has been rumbling on since February.

Yahoo stated on Friday that it had turned down Microsoft's revised bid to buy its search business.

In a statement, it said it had "determined, after careful evaluation, that such a transaction would not be consistent with the company's view of the converging search and display marketplaces, would leave the company without an independent search business that it views as critical to its strategic future and would not be in the best interests of Yahoo! stockholders".

Microsoft retorted that: "This partnership would ensure healthy competition in the marketplace".

But, in a move sure to further fan the flames of discontent amongst shareholders who wanted the deal to go ahead, Microsoft has now revealed exactly what Yahoo turned down.

In an email to employers, the computing giant says that it offered $9 billion in cash and $1 billion a year in additional operating profit.

And this was for a 16% stake in Yahoo and $1 billion of it was to buy Yahoo's search business and assume its operations.

The $1 billion a year in additional operating income to Yahoo would be due in part to a 3-year guarantee of better rates for advertisements tied to its search results than Yahoo's current Panama advertising system.

"Unfortunately Yahoo has chosen a different course, and yesterday announced an agreement that would start to consolidate over 90% of the paid search advertising market in Google's hands", said Microsoft in the email.

"This will make the market far less competitive."

Yahoo hasn't responded.