Despite a lucky escape in 2008, Microsoft is reportedly leading a bid to buy its partner Yahoo
Microsoft is believed to be readying a new bid, with partners, to buy Yahoo, according to the Wall Street Journal.
The software giant is joining with private equity firm Silver Lake Partners and one if its investors, the Canada Pension Plan Investment Board, according to the WSJ report. Microsoft was rumoured to be preparing a new bid earlier this month and under the proposal, Microsoft would provide several billion dollars of funding with additional financing arranged by banks. Silver Lake, which was involved in the deal which saw Microsoft acquire Skype, and CPP would put up the rest of the amount, which would be less than Microsoft’s contribution.
Possibilities on the table
The partners are discussing a number of combinations but could abandon the bid if financing is a problem or the deal becomes too complex. At least eight other private equity firms are rumoured to be interested in a buyout of Yahoo and are attracted by its global audience of nearly 700m people who visit Yahoo’s sites every month.
Microsoft failed with a $44.6 billion (£28.2bn) offer to buy Yahoo in 2008 , but since then Yahoo’s shares have lost nearly 44 per cent in value and Microsoft CEO Steve Ballmer has admitted that it was a “lucky escape.”
This has made Microsoft reluctant to make a solo bid for Yahoo, but the two companies agreed a ten-year search and advertising deal for Microsoft’s Bing search engine to power Yahoo’s search in 2009. Microsoft’s interest is fuelled by its desire to protect and enhance the current partnership.
However a rival bid may emerge from Chinese internet company, the Alibaba Group. Yahoo currently owns a 40 per cent stake in Alibaba, whose growth prospects are believed to contribute greatly to Yahoo’s market value.
Alibaba’s chief executive Jack Ma has said that it will begin talking to private-equity companies in coming weeks about a possible acquisition and at the very least would like to buy back Yahoo’s stake in it.
Yahoo co-founder Jerry Yang said the company hasn’t ruled out a possible sale and Yahoo’s board recently authorised its bankers to send financial information to prospective buyers as part of its strategic review.