Report: Microsoft still planning to pursue Yahoo on its own

Despite reported talks with News Corp. over a joint bid for Yahoo, Microsoft still plans to go after the company solo

While Microsoft has been in discussions with News Corp. about putting in a joint bid for Yahoo, people close to Microsoft told that the software company still plans to go after Yahoo on its own, the Wall Street Journal reported.

In addition, Yahoo's board of directors failed to reach any decisions after meeting Friday to discuss the path the company should take, the Journal said.

Microsoft and News Corp. which is owns Dow Jones, publisher of the Journal, declined to comment.

According to the Journal report, Yahoo's advisers gave the directors their opinions of Yahoo's options, which include negotiations with Time Warner's AOL unit and Google, or talking with Microsoft about its unsolicited takeover bid.

Both Yahoo and AOL declined comment.

People familiar with the matter told the Journal that Time Warner had been expecting the Yahoo board to move closer to supporting a deal with AOL. That the board took no action might mean the directors are hesitant about merging with AOL. However, one person told the Journal that Time Warner is continuing its discussions with Yahoo. That deal calls for Time Warner to fold AOL into Yahoo then make a cash contribution in return for a 20 per cent equity stake, people familiar with the matter told the Journal. Under the deal, AOL would be valued at about US$10 billion, excluding AOL's dial-up Internet-access business, the Journal said.

Yahoo has also been talking with Google. Last week the two companies announced a two-week test in which Yahoo will deliver relevant Web advertising from Google alongside its own search results. Yahoo and Google are looking into a more extensive search-advertising deal, although antitrust experts say such a deal would not pass regulatory muster.

Meanwhile, Microsoft CEO Steve Ballmer on April 5 said Yahoo had three weeks to accept its US$42 billion takeover offer or it would face a battle to replace its board and possibly a lower offer. Yahoo responded that it was open to considering a Microsoft takeover, but it wanted a higher offer. In February, Yahoo rejected Microsoft's unsolicited US$44.6 billion stock-and-cash offer, saying that it undervalued the company. The deal is now worth about US$42 billion because of a drop in Microsoft's share price.

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Linda Rosencrance

Computerworld
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