One year ago today was the first time I ever mentioned the idea of Microsoft acquiring Yahoo, at that time Microsoft had gone public with it but in February of this year Microsoft formally announced that they were offering $44.6 billion to acquire Yahoo.

Microsoft then made a deadline for Yahoo to respond, which then ended and the story seemed to drag on forever. Yesterday it all ended when Microsoft officially abandoned the Yahoo acquisition.

“We continue to believe that our proposed acquisition made sense for Microsoft, Yahoo and the market as a whole. Our goal in pursuing a combination with Yahoo was to provide greater choice and innovation in the marketplace and create real value for our respective stockholders and employees,” said Microsoft CEO Steve Ballmer in a statement distributed early Saturday evening.

Microsoft had raised the initial bid to $33 per share but that didn’t sway Yahoo which wanted $37 per share. “After careful consideration, we believe the economics demanded by Yahoo do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal,” said Ballmer.

Yahoo has issued a statement saying that they do still believe that the offer was too low and that many shareholders agreed with that position.

I am a little surprised by this, I at least expected Microsoft to “attempt” a hostile takeover (the only reason I use “” around attempt is because I believe it would have been a half hearted attempt). But, I also think that this was their best decision, having to deal with the merger of two monoliths would have been a nightmare and might have given Google enough time to pull ahead even further.

Although I’ve heard that some analysts may be thinking that this is just Microsoft’s way of waiting until the Yahoo stock price tanks and then trying to either do a hostile takeover anyway or offer another acquisition bid, but I hardly see that happening especially since I don’t believe Microsoft ever really wanted Yahoo to beginning with.

MacWorld