Yahoo Shares Plunge 22pct In Premarket After Microsoft Drops Bid

May 5, 2008 10:21 a.m. EST

New York, NY (AHN) - Shares of Yahoo plunged by as much as 22 percent in pre-market trading on Monday after it dismissed Microsoft's raised bid of up to $44.6 billion or $33 a share. Yahoo was asking for $37 a share.

As a result, Citigroup and ThinkPanmure analysts downgraded Yahoo's shares to sell. After falling to $22.41 per share in premarket trading, the Internet company dropped 19.7 percent after the morning bell.

"[The] market is purely reacting to the cancelled takeover bid," trader Kai Wagner from Julius Baer/Kepler Research told AFP news agency

Yahoo's shares were at $19.18 when Microsoft's offer was opened.

Shares of Microsoft also dipped by $6.37 to $22.30 in European markets after the software maker withdrew its bid following three-month long takeover battle.

Yahoo shares finished at $28.67 on Friday, when investors were hopeful about a deal.