Microsoft signs NDA with Yahoo, hinting at potential bid

By Tom Warren, on 23rd Nov 11 4:38 pm with 18 Comments

Microsoft has reportedly signed an nondisclosure agreement with Yahoo.

The nondisclosure agreement (NDA) allows Microsoft to take a closer look at Yahoo’s finances. The New York Times reported on Wednesday that the NDA could see Microsoft provide billions of dollars in financing as part of a consortium to Yahoo. Microsoft is reportedly looking to keep its advertising and search deal with Yahoo. The NDA report follows recent rumors from October that the software giant was considering a partnership deal with Yahoo. The partnership deal could work into a full blown acquisition according to The Wall Street Journal, who reported in October that 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.

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.

Microsoft announced an online advertising deal with AOL and Yahoo to sell premium online display inventory earlier this month. The agreement will allow each network to offer each other’s premium non reserved online display inventory to advertising customers. Microsoft, Yahoo and AOL will all continue to operate their core networks and advertising separately but the partnership will benefit advertising customers wishing to buy up inventory across all the sites.

  • Anonymous

    Hasn’t the purpose of an NDA just been defeated?

    • Anonymous

      why? the purpose of the NDA is for MSFT not to disclose yahoo’s internals. An NDA doesn’t mean you can’t disclose you’re under NDA. It is a very standard business practice that if you look at the books of a companies you’re under NDA anyways so this tells us nothing we didn’t already know other than they are indeed interested enough to look at the books.

    • http://www.winrumors.com Tom W

      Yeah I agree with @neonspark:disqus - the actual NDA usually isn’t secret, just its contents.

  • Justfortherecord

    With the likes of Winrumors and other Bloggers secrecy is becoming a luxury and not the standard.

  • Anonymous

    hrmm.. recent shareholder meeting said microsoft was hoarding too much cash.  The one thing this could do is offset the bing costs as ccost incurred vs the large annual partnership costs.. means Bing could probably reduce operating costs a few hundred million per quater and gain/keep marketshare getting them one step closer to the black

  • BadManDuke

    If they are really serious about Yahoo, at least it sounds like they are partnering with other firms so they won’t take the full hit alone.

    It will be interesting to see what kind of BS Jerry Yang will try to pull this time around.

    • Guest

      Yang was trying to put a private deal together. Many thought he should not be part of the decision because of that conflict. Either way, he’s not going to be able to stop a deal this time.

    • BadManDuke

      Yeah I remember reading that also.

      Yang is such a tool. I really hope the board eventually gives him the boot because its obvious that means to poison any deal that doesn’t have him in control.

    • Guest

      Yup, he really blew it. First letting Google take over search, then rebuffing MS’s many requests to partner, and finally trying to sweeten MS’s already honey-dipped offer resulting in its termination. He may just be an even worse CEO than Ballmer.

  • Guest

    More good money after bad. Ballmer is a one-man shareholder value wrecking machine.

  • http://www.facebook.com/people/Jairo-Luciano-Alves/100002545369889 Jairo Luciano Alves

    Microsoft should save cash to buy RIM or Nokia instead.

    • Guest

      Why buy Nokia when they currently have all the benefits of ownership without the hassles? Why buy RIM at all? All it would do is alienate existing partners like Google buying MMI did.

    • http://www.facebook.com/people/Jairo-Luciano-Alves/100002545369889 Jairo Luciano Alves

      im my humble view, RIM will give a foothold on mobile enterprise. And this is very valuable for a company like Microsoft. In Nokia’s case, it is about building an integrated experience, and forcing other OEMs to comply to a higher quality standard.

  • Anonymous

    If Microsoft ends up buying all of Yahoo they should split their company in two, one for content (MSN, video games, Zune video/music etc) and then have office/OS stuff in the other company.

  • Anonymous

    They seriously need to get rid of Ballmer before he kills the company.. of what use will yahoo be to Microsoft?  Anyone care to elaborate why they are even thinking about buying Yahoo? 

    • Guest

      Yes, but the damage is already done. Now it’s just a question of how bad things will get before he’s replaced and whether that will be too late for a future turnaround. Since he just got relected and with 92% approval, that’s at least a year away and probably several.

      They’re thinking about participating in a Yahoo buyout because they need to retain Yahoo’s search share. That scale is required in order to make Bing’s business model viable as well as to have any chance against Google.

    • Anonymous

      Thing is Goigle has a very entrenched position in the search engine market and its very hard to overtake them kinda like how almost no company could make a serious dent on the desktop OS market.

      I understand why MS needs to be relevant in the search engine space but they are not puting up a fight . Google is improving everyday, streamlining and entering into new market whiles Microsoft bay steps a foot into the outside world. they are still stuck in the US .

      What they really need do is to provide alternative solutions to what Google is offering and market tbd hell out of it.. .

    • Guest

      I don’t disagree. I’m just answering your question on why they’re trying to save the Yahoo partnership.