Yahoo ends talks with Microsoft, looks to Google


— 3:36 PM on June 12, 2008

Bad news for Carl Icahn: Yahoo sent out a press release earlier today saying it has stopped all talks of a "potential transaction" with Microsoft, ruling out a merger between the two companies as well as a partial acquisition. The firms had been discussing a partnership other than an all-out buyout since May.

According to Yahoo, the talks ended after a meeting where "Microsoft representatives stated unequivocally that Microsoft is not interested in pursuing an acquisition of all of Yahoo!, even at the price range it had previously suggested." Not so surprisingly, Yahoo shares plummeted from a high of $26.33 to $22.50 as the news broke, although they've since climbed back up to $23.52. The shares rocketed from $20 to almost $30 after Microsoft announced its first bid earlier this year.

Meanwhile, the rumor mill is teeming with whispers that Yahoo and Google are about to announce a search advertising partnership. Citing sources "familiar with the matter," Reuters says Yahoo ended talks with Microsoft precisely because it came to an agreement with Google.

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