[ubersync]

Why isn't this mentioned/discussed anywhere. In 2008 Microsoft offered $45 Billion to acquire Yahoo. Then Yahoo CEO Jerry Yang rejected the offer, saying that the bid "substantially undervalues Yahoo." Microsoft raised the bid to 50 Billion, and it was yet again rejected. After that MS withdrew its bid. 8 years later, at 10% the original offer!

[neilk]

That was for all of Yahoo. This is for the search & advertising part. These are measurably inferior than their competitors (although, by less than you might think) but more importantly, have failed to win at the network-effects game.

[vijayp]

Well, YHOO's total market cap is now about $37.36B, so it's not a complete travesty. (MSFT would have gotten the Alibaba investment with the $45B offer)

[dpark]

Eh, it's a pretty complete travesty. 8 years later the stock is still almost 20% below the $45B offer price, which was by the way a 60% premium over the market cap at the time.

I still have trouble wrapping my head around why Microsoft even made the offer, but I have even more trouble understanding why Yahoo rejected it.

[ethbro]

MS: Yahoo says they're worth way more than we can figure out. They must know something we don't. Offer them a premium!

Yahoo: MS offered us way more than we can figure out we're worth. They must know something we don't. Reject the offer and we'll monetize it ourselves!

[dangrossman]

In those intervening 8 years, Yahoo sold a big chunk of its BABA stock back to the company. If they kept the number of shares they had at the time Microsoft made the offer, that asset alone would be worth $48B today. If you add in the Yahoo! Japan holdings, the company would be worth at least $56B, even if the core Yahoo! business were worth nothing. It wouldn't have been a bad buy for Microsoft.

[charlesdm]

BABA wasn't public back then, though. It was inherently hard to value.

[aluminussoma]

Not quite. Yahoo's value at the time was still substantially undervalued. Don't forget Yahoo sold off a piece of their Alibaba stake after the bid - some estimates say had Yahoo held on to it, they would be worth much more today.