June 13, 2008 / 12:48 AM / 11 years ago

TIMELINE: Microsoft's pursuit of Yahoo

(Reuters) - Yahoo Inc YHOO.O said on Thursday that talks with Microsoft Corp (MSFT.O) on a full or partial acquisition have ended, and announced a search advertising partnership with rival Google Inc (GOOG.O).

The following is a timeline of key events in Microsoft’s pursuit of Yahoo, stretching back more than two years, when the Web pioneer’s financial results began weakening.

Early 2006 - Yahoo begins to report a string of disappointing quarterly results that stretches over the next two years, reflecting competitive missteps by the company, market share gains by rival Google, changes in the online advertising landscape and weakening spending in some ad segments.

Late 2006/early 2007 - Microsoft and Yahoo discuss various partnerships, including a merger.

2007

February - Yahoo, under the leadership of previous Chief Executive Terry Semel, tells Microsoft it is not the right time to discuss a takeover, as the Yahoo board sees great potential from new advertising technology and internal changes.

June 12 - A strong minority of Yahoo shareholders challenges Yahoo’s direction, as CEO Semel comes under fire. Nearly a third of votes cast at the company’s annual shareholders’ meeting oppose some of Yahoo’s directors.

June 18 - Yahoo co-founder Jerry Yang takes over as chief executive as Semel steps aside. Semel remains Yahoo chairman.

2008

January 31 - Microsoft CEO Steve Ballmer makes a $44.6 billion, $31-per-share cash-and-stock takeover offer to Yahoo’s board. Semel resigns as chairman and is replaced by Roy Bostock.

February 1 - Microsoft makes the offer public. Its shares fall 6.6 percent to $30.45; Yahoo shares rise 48 percent to $28.38.

February 11 - Yahoo rejects the Microsoft offer as too low.

February 13 - MySpace owner News Corp NWSa.N and Yahoo discuss a tie-up, according to a source.

March 18 - Yahoo gives financial forecasts for the next two years, in an effort to prove it is worth more than Microsoft bid.

March 28 - One of seven face-to-face meetings takes place between the “senior-most” executives of Microsoft and Yahoo to discuss the bid. Yahoo asks how Microsoft would handle regulatory issues, including antitrust concerns, tied to a merger.

April 4 - People familiar with the matter say Microsoft is evaluating its bid for Yahoo because the Internet company may have lost value since Microsoft first made its offer.

April 5 - Microsoft sets a three-week deadline for Yahoo to negotiate and reach a deal or face a proxy fight and a possible cut to the bid.

April 7 - Yahoo again rejects Microsoft and says it is open to a higher price.

April 9 - Yahoo says it will test Google search ads on its site, which could be more lucrative than selling its own search ads. Sources say Yahoo and Time Warner Inc TWX.N are in parallel talks to join Time Warner’s AOL and Yahoo.

April 15 - At another meeting between Yahoo and Microsoft executives and their financial advisers, Yahoo asks about Microsoft’s integration plans and Yahoo raises a list of “key non-price deal terms” it believes are critical.

April 26 - Microsoft’s deadline to Yahoo passes.

April 30 - Ballmer flies to California for talks with Yahoo CEO Yang.

May 3 - Yang meets Ballmer in Seattle. Microsoft raises its offer to $33 per share, or $47.5 billion. That is about $5 billion over the value of the previous offer at the time. Yahoo wants $37 per share, or about $5 billion more. Late in the day, Ballmer calls off the talks.

May 15 - Carl Icahn proposes a 10-member dissident board slate for election at Yahoo’s annual shareholder meeting in July. Icahn says he now holds a 4.3 percent stake in Yahoo, including 9.9 million shares and 49 million call options. Yahoo Chairman Bostock replies to Icahn that “none of the alternatives we are considering would preclude us from entering into a transaction with Microsoft or any other party.”

May 18 - Microsoft says it has raised with Yahoo an “alternative” deal that would not involve the software maker buying all of the web company but says it could reconsider pursuing a full acquisition. A source says Microsoft proposed to buy Yahoo’s search business and as part of the deal, Yahoo would put its Asian assets up for sale and Microsoft would buy a stake in what remains of the company.

May 22 - Yahoo nominates nine of its board directors for reelection, setting the stage for a showdown with Icahn. It postpones its annual shareholders’ meeting.

June 6 - Icahn says Yahoo should offer to sell itself to Microsoft of $34.375 a share. The two sides exchange a series of letters in an acrimonious war of words.

June 12 - Yahoo announces search advertising deal with Google for up to 10 years, and says talks with Microsoft have ended. Sources say Microsoft offered to pay $35 a share for a 16 percent equity stake in Yahoo as part of an alternative deal that would have involved buying Yahoo’s search business. Yahoo forecast an $800 million annual revenue opportunity from the Google deal, and a $250 million to $450 million boost to cash flow in the first 12 months. U.S. lawmakers are expected to scrutinize the deal over antitrust concerns.

August 1 - Yahoo will hold its annual shareholders’ meeting

Sources: Statements from Microsoft, Yahoo, Google and Icahn; Reuters stories.

Compiled by Eric Auchard, Peter Henderson and Tiffany Wu; editing by Carol Bishopric

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