Yahoo shares are sure to take a big hit. But I don't see how Microsoft can afford to buy Yahoo at such inflated prices. Probably a good decision on MS' part.
After Yahoo! announced that they actually are interested in MS buying them, they got "Yahowned" when MS responded that they are no longer interested. Ouch, that had to hurt. DailyTech - Microsoft Doesn't Want Yahoo Back, Enjoys "Independence"
I really wasn't sure how I felt about the merger. In some ways it seemed like it would have been beneficial for Yahoo but I don't always like the way MS screws things up. If I were the CEO I would have taken the offer.
I felt they were pushing for too high a price. It would have been nice for their shareholders to hit such a high price but it's really not foreseeable that Yahoo will hit such a high share value in the short-to-medium term.