Microsoft Offers Yahoo Alternative

Microsoft is reported to have offered Yahoo an unnamed alternative to a full acquisition, believed to be a mutual venture for search-related advertising.

The next chapter in the Microsoft-Yahoo saga has begun, with Reuters reporting that Microsoft has announced that it’s proposed a new deal to Yahoo. However the Redmond team won’t say exactly what it is. However, one person familiar with happenings told the news agency it’s unlikely to satisfy billionaire Carl Icahn, who launched a proxy bid to oust the Yahoo board last week.

In a statement yesterday, Microsoft would only say that it was "considering and has raised with Yahoo an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo." The New York Times, however, has reported a possible partnership or joint venture between the two companies in the search-related ad field that would pit them against Google. 

But sources within both companies have suggested the deal might involve Microsoft buying Yahoo Internet search business. They tried to purchase a stake in it two years ago, but were rebuffed at the time.

But that would seem to contradict the fact that Yahoo is in talks with Google about, guess what, a search ad partnership. One source has said that there could be a deal as early as this week.

In other words, everything is in flux at Yahoo, and it replied to Microsoft’s statement by saying that it was "open to pursuing any transaction which is in the best interest of our stockholders."

Meanwhile Icahn has begun his move to oust Yahoo’s board after claiming they did not act in the interests of shareholders with regard to Microsoft’s original offer. He’s said to have gained the support of a hedge fun that has a 3.4% stake in Yahoo, as well as other investors.