Google in talks to finance bid for Yahoo

Search giant mulling over plans to finance third parties' interest in buying out rival Yahoo--a move which may have been prompted by Microsoft's reported interest, according to report.
Written by Ellyne Phneah, Contributor

Google is considering plans to provide financial backing to fund bidders that are keen to acquire rival Yahoo.

The search giant might eventually decide not to take part in any offer and had not engaged in serious discussions with potential partners, according to a Bloomberg report, which cited a source who declined to be named as discussions were private.

Armed with US$42.6 billion in cash and short-term investments, Google was considering options to offer financial help to other bidders, rather than attempting to acquire Yahoo outright, the source said.

Yahoo is weighing strategic options after firing former CEO Carol Bartz for her failure to keep up with Google in the online advertising market, Greg Sterling, an analyst at San Francisco-based Opus Research, said in the report. Google is under regulatory scrutiny from governments worldwide and may lend its financial support to preserve Yahoo as a rival as well as competition in the Internet industry, Sterling explained.

"If competition dissipates or diminishes, then the hand of regulators is strengthened," he said. "Then all arguments about Google being a monopoly ring more true."

Google's move may have been prompted by longtime rival Microsoft, which is reportedly weighing the feasibility of bidding  for Yahoo, which has a market value of almost US$20.4 billion, Sterling said.

Several private equity firms are considering whether to pursue Yahoo, including Silver Lake Partners, Providence Equity Partners, Bain Capital, Hellman & Friedman, Blackstone Group and KKR. Alibaba group, which largest shareholder is Yahoo and has also indicated its interest in the Web portal, an arrangement that will help the Chinese company reclaim its 43 percent stake.

Google and Yahoo declined to comment on the potential acquisition.

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