Yahoo shares plunge after Microsoft drops bid



Shares in Yahoo Inc fell almost 20 per cent in Frankfurt on Monday after Microsoft Corp walked away from its bid for the Internet company.

Yahoo shares were down 19.7 per cent in Frankfurt at 14.55 euros ($22.50) at 0820 GMT, while Microsoft rose 3.7 per cent.

Microsoft on Saturday sweetened its initial $31 per share offer for Yahoo to $33, but then withdrew from the talks when Yahoo Chief Executive Jerry Yang dug in for a price of $37. Yahoo shares closed at $28.67 on Friday.

Yahoo now faces growing pressure to find an alternative strategy to Microsoft's $47.5 billion takeover offer.

It is likely to push for an advertising partnership with web search leader Google Inc, sources familiar with the matter said on Sunday. A tie-up with Google, seen as a big winner from the end of Microsoft-Yahoo talks, should help boost Yahoo's operating performance in the near term.

Google shares rose 3.4 per cent in Frankfurt on Monday.

Yahoo is also still considering a deal with another Internet media and advertising major, such as Time Warner Inc's AOL, people familiar with the discussions said.

"Yang is certainly under a lot of pressure now," said Roland Hirschmueller, an equities trader at German brokerage Baader. "His days are numbered, if he doesn't manage to come with an alternative strategy," he added. (Reuters)