Microsoft reportedly working on bid to buy Yahoo

By Tom Warren, on 20th Oct 11 7:00 am with 18 Comments

Former Yahoo CEO Carol Bartz and Microsoft CEO Steve Ballmer

Microsoft is reportedly working on a fresh bid to acquire Yahoo.

Reports emerged earlier this month that the software giant was considering a partnership deal with Yahoo. The partnership deal may have advanced into full blown acquisition talks according to The Wall Street Journal. Microsoft is working with the Canada Pension Plan Investment Board and Silver Lake Partners, a private equity firm, to ready a bid to acquire Yahoo. The Wall Street Journal reports that “at least nine private equity firms” are studying a potential buyout. The deal would value Yahoo at around $16-18 per share.

Microsoft CEO Steve Ballmer recently revealed that Microsoft was “lucky” not to buy Yahoo back in 2008. “You know, times change, times change,” said Ballmer. “The market really kind of fell apart. Sometimes you’re lucky,” he added. Microsoft famously offered $44.6 billion cash-and-stock to purchase Yahoo in February, 2008. The deal was an intense one for both parties, valuing Yahoo’s stock price at $31, a significant premium on its true value at the time. Despite the offer, Yahoo declined and wanted more cash. Microsoft upped its offer to $33 a share but Yahoo believed the company was worth $37 per share.

The failed deal surfaced as a search deal between Bing and Yahoo. Microsoft secured a 10-year deal in July 2009 to push Bing as the exclusive algorithmic search and paid search platform for Yahoo! sites. The agreement ended Microsoft’s talks with Yahoo which had lasted nearly two years. Yahoo has failed to make an impact with its various web properties, despite acquiring popular photo sharing site Flickr. The once popular web portal and search engine has struggled against Google and Facebook in the new world of social networking.

Yahoo’s board fired CEO Carol Bartz in early September over the phone after nearly three years in charge of the struggling internet services company. Yahoo has yet to appoint a new CEO. Yahoo cofounder Jerry Yang admitted on Wednesday that the company’s advertising search deal with Microsoft hasn’t worked out as well as they’d hoped. Speaking on stage at the AsiaD conference, Yang said “It takes trial and error. It takes work. I will probably venture that the Microsoft folks would say the partnership hasn’t gone the way they wanted.”

  • http://techin5.com Jubbin Grewal @Techin5.com

    BEST IDEA EVER! Not….

  • Anonymous

    Sure, for $0.02 a share!

    • Anonymous

      Their stock value right now is $16 a share, so I guess MS can’t really offer less than that.  But from what I read, the only thing keeping their investors from fleeing is the potential that MS will buy them out.  Maybe MS should wait another year for their stock to hit around $8.  Then it may actually be a decent buy, about $10 billion for a company with annual revenues still around 1 billion.

  • Blacktalonz

    But I thought they were so lucky to not have bought Yahoo?  Just can’t believe monkey boy, ever!

    • Hoi

      Well your lucky when you not buy something, what later is available for almost 50% less.

    • Guest

      Why don’t you learn how to read? Him comment was about MS’s previous offer to buy them at $31, which was incredibly stupid. This one, assuming it’s even true, would be for far less and as part of a consortium. Business is fluid. It’s requires intelligence and the ability to adapt. That’s why he’s running a multi-billion business and you’re not.

  • http://twitter.com/OldCongress Gamer

    What?! 16~18 per share? I am not buying Yahoo anymore, the agent fees alone will eat up a huge sum of money already.
    I’ll invest my remaining 5k USD to Nokia instead.

  • http://twitter.com/s_a_r_k_i_s sarkis chamelian

    Yahoo + Bing = Yah-Bingoo  ! haha  This will be purchased Q2 :) 2012

  • Anonymous

    Not again.. haven’t these peiople learnt their lessons? What exactly will Yahoo bring to the table..?

    • Anonymous

      Millions of loyal users.  How to successfully merge them with Microsoft users is beyond me though.

    • Guest

      A bunch of valuable Asian assets and a declining search business.

  • Anonymous

    Please do not dismiss this. Worldwide Yahoo Messenger is still pretty popular, so is their free webmail offering obviously. Imagine MS merging the 2 massive userbases(they already have interoperability at chat level). And also think about search, Yahoo search becomes Bing search(it already is technically, but it will also be at face value). The best time to buy it is when it is heading towards demise.

    • Guest

      + Skype.

  • http://www.mainstreetchatham.com/ JimmyFal

    Yahoo has a large # of things to offer. I don’t use it, but I have a LOT of customers that rely on it as if it was the “internet”. They don’t really even know what IE, Chrome or Firefox is, but the know they use Yahoo to do stuff with. And the many consumers are kind of in that same boat. I think if MS gets Yahoo, their audience will be the single largest property on the internet. Not sure what the downside of that is.

    • Anonymous

      What remains to be seen is what they do with it if they do acquire Yahoo!. I’ve read rumors that the first order of business between MS and its purported partners is to spin off Yahoo!’s asian assets. Undoubtably MS wants the search tech, email, possibly Flickr, and other US based properties, so that move could MS’s way of getting the parts it wants without having to buy the whole company.

      Having both Yahoo! and MSN seems rather redundant though, so its anyone’s guess what action they would take.

  • Anonymous

    It will be interesting to see how Jerry Yang will try to screw this up if it’s true.

    However it turns out, I have a feeling he’ll turn up at Google later on.

  • Anonymous

    As long as it makes money or has valuable assets, I’d say buy it.  

  • Guest

    Insanity: doing the same thing over and over again and
    expecting different results.Albert Einstein