Tuesday, May 20, 2008

Microsoft considers new Yahoo! deal

Following Steve Ballmer's revelation that he'd called off the marriage between Microsoft and Internet portal Yahoo! earlier this month, the software giant has revealed that it is mulling a fresh deal with Yahoo!

"Microsoft is not proposing to make a new bid to acquire all of Yahoo! at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo! or discussions with shareholders of Yahoo! or Microsoft or with other third parties," said a statement issued by Microsoft yesterday.

The statement doesn't reveal a great deal, but the subtle dig at the end of it is enlightening, especially following billionaire investor Carl Ichan's bid to oust Yahoo!'s board of directors last week. Microsoft is prepared to talk with whoever wants to listen, it seems – this is quite a backtrack on previous statements that came out of the company after the original deal fell through.

A statement from Yahoo! followed soon after Microsoft's, and said nothing more than that Yahoo!'s board of directors are keen to maximise stockholder value.

"Yahoo! has confirmed with Microsoft that it is not interested in pursuing an acquisition of all of Yahoo! at this time. Yahoo! and its Board of Directors continue to consider a number of value maximizing strategic alternatives for Yahoo!, and we remain open to pursuing any transaction which is in the best interest of our stockholders. Yahoo!'s Board of Directors will evaluate each of our alternatives, including any Microsoft proposal, consistent with its fiduciary duties, with a focus on maximizing stockholder value," said the response.

Rumours suggest that Microsoft is proposing a partnership or joint venture with Yahoo! and its search advertising business, but despite both parties saying that Microsoft would not seek to fully acquire Yahoo!, I would be surprised if an acquisition isn't considered during this round of talks. This is especially given the fallout and subsequent uproar from Yahoo!'s shareholders following Microsoft's original withdrawal – the key to this is where Yahoo! suggests that it is willing to listen to "any Microsoft proposal".

Do you think Microsoft and Yahoo! will ever get together in some shape or form? Discuss in the forums.

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