Yahoo Co-Founder Rejected Microsoft's $44.6 Billion Offer Because It "Substantially Undervalues Yahoo." Nine Years Later, Yahoo Sold for $4.48 Billion.

In February 2008, Microsoft CEO Steve Ballmer made an unsolicited offer to acquire Yahoo for $44.6 billion — a 62% premium over its market value. Yahoo co-founder Jerry Yang, convinced that the internet pioneer was worth far more, rejected it as insulting.

Microsoft sweetened the offer to $33 per share (~$47.5 billion). Yang demanded $37. Microsoft walked away.

What followed was a decade-long death spiral. Yahoo cycled through five CEOs. It passed on acquiring Google for $1 million in 1998 and Facebook for $1 billion in 2006. It suffered multiple massive data breaches affecting 3 billion user accounts. The company that once had a market cap of $125 billion became a cautionary tale in every business school.

In 2017, Verizon bought Yahoo's core business for $4.48 billion — roughly 10% of Microsoft's original offer. Adjusted for inflation, it was even worse.

Yang stepped down as CEO four months after rejecting Microsoft. Shareholders sued. Carl Icahn launched a proxy war. The board eventually settled with Icahn and admitted defeat.

That $44.6 billion Microsoft offer? It turns out that *substantially* undervalued Yahoo... compared to $4.48 billion.