Microsoft proposes new deal to Yahoo!

May 19th, 2008 - 3:34 pm ICT by admin  

New York, May 19 (IANS) Showing how hard it needs Yahoo! by its side to gain an edge in internet search and advertising, Microsoft has proposed a new deal with the search engine that would involve collaboration but not a full takeover. In a brief statement released Sunday, Microsoft disclosed the renewed talks with Yahoo!, just weeks after withdrawing its $47.5 billion takeover bid, which was rejected by Yahoo! as being too low.

Microsoft said 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 software giant, however, does not rule out merger talks with the search engine.

Media reports said the renewed talks between the two revolve around partnership or joint venture for search-related advertising to compete against Google. The earlier unsolicited bid in February too was part of Microsoft’s battle to increase its small share of the search-related advertising market against Google, the dominant player with 58 percent share of the market.

Microsoft’s new offer comes at a time when Yahoo! is in talks with Google for a possible partnership on the one hand and facing increasing pressure from its shareholders, some of whom are angry that its board did not work harder to reach a deal to sell the company to Microsoft.

Last week, Carl C. Icahn, the activist investor, mounted a proxy contest to replace Yahoo’s board. He is said to push Microsoft and Yahoo! back to the negotiating table to reach a full-scale takeover.

In its Sunday statement, Microsoft insisted it was not making a bid, but hinted that it could be persuaded to reverse course.

“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,” the company said.

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