Following failed attempts at a Yahoo! buyout and merger by Microsoft in 2008, the two tech companies reconvened for talks in 2009, this time an advertising agreement was reached. Microsoft will power Yahoo's search, and will give them 88 percent of the ad revenue, for the initial five years of the agreement.

Microsoft offered to buy Yahoo! for $44.6 billion in a cash and stock deal on February 1, 2008. The board of Yahoo! agreed to reject the bid on February 9, stating the bid highly undervalued their company.

Microsoft sent Yahoo! a letter on April 5, 2008, giving them until April 26 to accept their offer. Microsoft claimed if a deal was not reached by that date, they would take their proposal to the Yahoo! shareholders and if necessary work to elect a new board of directors for Yahoo!. Microsoft CEO Steve Ballmer also stated if Yahoo! does not accept the offer they will be lowering their bid.

On April 7, the Yahoo! board of directors publicly rejected the offer, stating that it would not be in the best interest of their shareholders to accept the proposal as it is.Yahoo Press Release: Yahoo!'s Board of Directors Responds... (April 7, 2008)

The April 26 deadline passed with no deal established between the two companies. Initially, Microsoft CEO Steve Ballmer and CFO Chris Liddell insinuated that if Yahoo! does not accept the offer by the deadline, Microsoft would pursue more aggressive measures, which would include electing a new board of directors and taking a lower proposal to the shareholders.MSNBC: Microsoft in Quandary Over Yahoo Bid (April 26, 2008)

On May 3, 2008, Microsoft withdrew their bid to buy Yahoo! after the software firm refused to meet Yahoo's asking price.The New York Times: Yahoo Stock Plunges After... (May 5, 2008)

In a letter to Jerry Yang, Steve Ballmer said that Microsoft had raised its offer to $47.5bn ($33 per share) but was unprepared to meet the $53bn Yahoo! wanted. Microsoft first declared interest three months earlier, at which time Yahoo's share price was $19.18.The New York Times: Yahoo Stock Plunges After... (May 5, 2008)

On July 12, 2008, Yahoo! rejected the latest deal from Microsoft, stating that "it is ludicrous to think that our board could accept such a proposal."CNN: Yahoo rejects joint proposal from Microsoft, Icahn (July 13, 2008) On July 17, Yahoo! CEO Jerry Yang reiterated to shareholders that he will sell Yahoo! to Microsoft for $33 per share or more.Mail Online: Yahoo letter to shareholders (July 17, 2008)

Reuters reported on December 10, 2008 that Ivory Investment Management LP, which owns 1.5 percent of shares of Yahoo!, wrote a letter to Yahoo!'s board urging them to try to rekindle a deal with Microsoft. According to the letter, Ivory Investment Management LP believes that a deal with Microsoft could as much as double Yahoo!'s worth.New York Times: Yahoo Shareholder Urges Sale of Search (December 10, 2008)

On May 18, 2008, it was announced that the two companies were considering a new, more limited cooperative deal to expand Internet advertising programs in an effort to compete with Google.

Although Yahoo! had been in talks with AOL, Microsoft announced in July of 2008 that they are still interested in Yahoo!, if shareholders vote to appoint a new board of directors. Yahoo! investor Carl Icahn has been reportedly working with Microsoft in an attempt to convince shareholders to replace the current Yahoo! board. Yahoo!'s board meets on August 1, 2008.San Francisco Chronicle: Microsoft open to new Yahoo deal - with a new board (July 7, 2008)

In an effort to avoid a struggle for control of the company during the August 1, 2008, shareholder's meeting, Yahoo! reached a settlement with Icahn, which it announced on July 21, 2008. The settlement gives Icahn a seat on the board of directors and the opportunity to appoint two additional members.The Associated Press: Yahoo settles with Icahn to avert control battle (July 21, 2008)

The Wall Street Journal reported in December 2008 that former AOL CEO Jonathan Miller is rumored to be talking with private equity and sovereign wealth funds to raise money for a possible Yahoo! buyout. Analysts estimate that Miller would need to raise somewhere between $28 to $30 billion to accomplish a buyout.VentureBeat: Miller May Make a Run at Yahoo! (December 2, 2008)

Yahoo! shares fell 19% on Wednesday, November 19, 2008, after Microsoft CEO Steve Ballmer said Microsoft was "done with all acquisition discussions with Yahoo."The New York Times: Ballmer Dismisses Yahoo Buyout but Open on Search (November 19, 2008) The two companies have been deadlocked over an acquisition plan for months. Though Ballmer had said in November 2008 that no acquisition was under consideration a new statement by Ballmer in December 2008 said that a search deal with Yahoo! would be better if done sooner rather than later.VentureBeat: After yet another Microsoft statement of disinterest, Yahoo stock down 15 percent (November 7, 2008) CNET: Report: Ballmer says Yahoo search deal... (December 5, 2008)