Microsoft Resurrects Yahoo Romance

19 May 2008

REDMOND, Washington: In a surprising U-turn ascribed by some observers to an 'understanding' with billionaire corporate raider Carl Icahn, Microsoft has resurrected its courtship of Yahoo – this time implying that the relationship need not go the whole hog.

The new approach came just days after Icahn filed a proxy slate seeking to remove every member of Yahoo's ten-strong board of directors – a move that followed his acquisition of some 50 million shares in the internet and search portal. 
Now, after flouncing-out from its $47.5 billion (€30,7bn; £24.4bn) takeover offer earlier this month, Microsoft has proposed a return to the negotiating table. Under pressure from Icahn, Yahoo is unlikely to refuse.

Says the software titan: "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." 

And to underscore the preceding eight words, the statement added: "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."

IDC analyst Shar Van Boskirk believes Microsoft's retreat from absolute acquisition is the key to a done deal: "Microsoft is most interested in [Yahoo's] search engine and marketing business," she opines.

Data sourced from Financial Times; additional content by WARC staff