Yahoo! Slides on Latest Microsoft Stiff-Arm

On Jan. 31, Microsoft made an unsolicited bid to buy Yahoo! for $44.6 billion and later bumped that offer to $47.5 billion before ultimately withdrawing it and replacing it with a deal to buy the company's search business for $1 billion. Yahoo! rejected the search deal, and on Saturday, rebuffed Microsoft's sweetened offer, which would have guaranteed $2.3 billion in annual revenue to Yahoo! for five years, with the option to extend the deal for another five.

Jefferies analyst Youssef Squali described the latest proposal "as another attempt to soften up Yahoo! as they reel it in for a full buy-out."

Squali added that the search deal poses clear risks to Yahoo! shareholders because any upside from Microsoft's minimum guarantees would be contingent on its ability to better monetize on search. He further noted that the deal would preclude the possibility of a sale of Yahoo! in its entirety, which could command a higher premium than just selling off the search business.