Microsoft in new attempt at Yahoo! link up

May 20 2008 by Iain Laing, The Journal

MICROSOFT has launched a fresh attempt to tie-up with internet giant Yahoo! but is stopping short of a renewed takeover bid.

Bill Gates’ software giant 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: “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 least £27.1bn – far higher than the £24.3bn 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 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.