updated 09:35 am EDT, Wed May 28, 2008
Yahoo Nearing MS Deal
Yahoo is finally nearing a deal that may involve either Microsoft, Google, or both, according to sources' reports at BusinessWeek. The magazine claims that Microsoft's assertions of wanting only a partial transaction with Yahoo aren't entirely true and that the company is entirely willing to buy out the whole of Yahoo rather than just a portion of the company, which is rumored to be either just the search advertising division or else the complete search business.
Yahoo is not only unlikely to offer "fierce opposition" to a complete buyout but may accept terms similar to those Microsoft gave just before backing out of its initial takeover attempt, which raised the price lightly above the original bid of $31 per share.
However, Yahoo is also reported as furthering talks with Google and may quickly announce plans with its search rival if Microsoft either purchases Yahoo's search ad feature or backs out altogether. Yahoo is said to be close to executing on its widely reported non-exclusive ad system that would allow Google as well as other companies, including Microsoft, to bid on ads that run alongside Yahoo's search results. The system would not only save Yahoo money by offloading some or all of the ad-related costs but would potentially increase revenue by having companies pay for the privilege of reaching Yahoo's visitors.
In the event no Microsoft deal is reached, Yahoo would continue to run search ads of its own, one source claims.
Either deal is considered potentially necessary by Yahoo's board, which faces the threat of a proxy-based board takeover from billionaire investor Carl Icahn as well as a number of interested parties that want to force Yahoo into a deal with Microsoft. A Google deal could reduce Icahn's pressure by allowing Microsoft to bid for ad space on Yahoo's pages as well as improving Yahoo'overall performance.