Microhoo 2? Microsoft reportedly eyes Yahoo bid

Summary:Microsoft is reportedly at least considering an acquisition of Yahoo. This time, the price will be much lower than $33 a share.

Here we go again. Microsoft is reportedly pondering a bid to acquire Yahoo, but denials abound.

According to Reuters, Microsoft may look to a partner---say Silver Lake, Comcast or others---to acquire Yahoo or parts of it. If you recall, Microsoft tried to buy Yahoo in 2008, but was rebuffed in one of the tech world's biggest blunders of the last decade. In 2008, Microsoft offered to buy Yahoo at $33 a share. Today, Yahoo is less than half that sum even after a run-up on merger speculation.

Also see: Which parts of Yahoo (if any)would make sense for Microsoft to buy?

The speculation around Yahoo is only going to heat up as the company preps a financial pitch book to court buyers. For now, denials of the Reuters report are emerging via AllThingsD and Bloomberg.

Alibaba CEO Jack Ma has already noted he was interested in acquiring Yahoo. Russia's DST is also interested, according to Bloomberg. However, U.S. regulators may not be hip to the idea of Chinese and Russian companies buying Yahoo.

As a result, Microsoft could be a critical partner in any Yahoo takeover.

Why would Microhoo 2 make sense?

  • First, Microsoft and Yahoo are already partners and know each other well from the search deal.
  • Microsoft needs Internet traffic to improve its revenue per search figures.
  • And Microsoft can't afford to let another company acquire Yahoo and then scuttle its search partnerships.
  • Microsoft's online unit has lost billions of dollars and Yahoo's financial picture would improve results. To be specific, Microsoft has lost $8.5 billion online over the last 9 years.
  • Yahoo also has key international assets in China that could put Microsoft on better footing to fight software piracy.

For a trip down memory lane, here's a look at former Yahoo CEO Jerry Yang reflecting on the move to turn Microsoft away at $33 a share.

Topics: Enterprise Software, Banking, Browser, CXO, Microsoft, Social Enterprise

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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