Microsoft Rejoins List of Companies Looking To Purchase Yahoo

Microsoft Corp. has joined a host of companies – including Providence Equity Partners, Hellman & Friedman, Silver Lake Partners, Chinese e-commerce giant Alibaba and Russian technology investment firm DST Global – that is looking to buyout internet search portal Yahoo Inc. in a deal that could be worth up to US$20 billion, said sources close to the situation, reported Reuters on Wednesday.

Microsoft Corp. has joined a host of companies – including Providence Equity Partners, Hellman & Friedman, Silver Lake Partners, Chinese e-commerce giant Alibaba and Russian technology investment firm DST Global – that is looking to buyout internet search portal Yahoo Inc. in a deal that could be worth up to US$20 billion, said sources close to the situation, reported Reuters on Wednesday.

The bid will signify the second attempt by the software giant to takeover Yahoo, after it failed to do so in a bitter and unsuccessful fight back in 2008.

According to Reuters sources, Microsoft may look for a second partner to go after Yahoo, particularly as internal divisions within the company remain uncertain on the deal. A second partner would smoothen the process, as it would require less investment from the company.

A high-ranking Microsoft executive told Reuters that while one faction within the company are extremely enthusiastic over the deal – believing that it would eliminate AOL as a competitor and create a strong Web portal that can offer better products to audiences, advertisers and end users – others feel that the company should not be investing so much money in a company that has dwindled in terms of growth potential. The last time Microsoft tried to buy Yahoo, it had offered as much as US$47.5 billion.

[quote]”Yahoo’s value hasn’t grown in years, and some executives feel we should buy something that is more forward-looking,” said the executive, who spoke on condition of anonymity.[/quote]

Yahoo is said to have already prepared financial reports that would be required for potential buyers in the event of a takeover.

News of a potential takeover pushed stock prices for Yahoo up to US$15.77, a 9 percent rise for the last 2 hours of trading and a 20 percent overall increase for the week.

Stock prices for Yahoo also rose in the hope of a bidding war between Microsoft and Alibaba, which confirmed its interest in buying out the California-based group last Friday.

Some even believe that Alibaba may be the partner that Microsoft could be looking for as it makes financial sense for both parties.

[quote]”If Microsoft gets involved, then you don’t need private equity,” said Susquehanna Financial Group analyst Herman Leung. “The problem for Jack Ma (CEO of Alibaba) is capital. Microsoft has $53 billion in cash. Why have to deal with bondholders and all this stuff when Microsoft can make that all happen for you?”[/quote]