Microsoft revives talks with Yahoo!

Microsoft has launched a fresh attempt to tie-up with internet giant Yahoo! but is stopping short of a renewed takeover bid, it emerged today.

Microsoft confirmed that it had put forward a proposal involving part of Yahoo! as an alternative to a takeover after talks collapsed earlier this month when the two sides could not agree on price.

It is thought that Microsoft is hoping to strike a deal to merge the two firms’ online internet search engine capabilities to take on the might of Google.

But Microsoft said it had not ruled out a full-blown bid for Yahoo!.

It said in a statement yesterday: “Microsoft is considering and has raised with Yahoo! an alternative that would involve a transaction with Yahoo! but not an acquisition of all of 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.”

Software giant Microsoft walked away from takeover talks after Yahoo!’s board demanded at at least $53bn (€34bn) – far higher than the $47.5bn (€30.4bn) that Microsoft was willing to pay.

Microsoft had been taking an aggressive stance with its unsolicited approach, threatening to take its offer direct to shareholders.

Yahoo! said in a statement late yesterday that its board was exploring several “value maximising” alternatives, adding that it remains open to “pursuing any transaction which is in the best interest of our stockholders”.

Yahoo! is facing pressure from its shareholders to reopen negotiations with Microsoft, with activist investor Carl Icahn threatening to replace the California-based company’s entire board unless a deal can be worked out before the group’s annual meeting on July 3.

Reports suggest Microsoft’s latest talks with Yahoo! could be aimed at providing an alternative to a search advertising partnership that Yahoo! has been exploring with Google as part of its attempts to remain independent.

The two rivals have been considering a long-term alliance after last month completing a two-week test that allowed Google to use its technology to sell ads alongside Yahoo’s search results.

But any deal between the two would likely raise competition concerns, with the two companies combined controlling more than 80% of the US search advertising market.