Is Microsoft Corporation About To Buy Yahoo?

Is Microsoft Corporation About To Buy Yahoo?
MIH83 / Pixabay

Rumors are swirling that Microsoft is preparing a bid for the core business of struggling internet company Yahoo.

According to reports Microsoft has been in discussion with private equity companies who may assist them in a possible purchase of Yahoo! Inc. (NASDAQ:YHOO). Reuters cites a source familiar with the situation who claims that executives at Microsoft have been meeting with potential Yahoo investors.

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Microsoft and Yahoo have a long-term relationship

The pair of companies have a long running relationship related to search and advertising. Microsoft is said to want to maintain that connection and buy Yahoo’s core business, which includes search, email and news.

A report in Re/code said that the company has spoken to several private equity firms and would be willing to provide “significant” financing for a bid.

As it stands Yahoo has a market capitalization of approximately $33 billion. However most of that is due to its stakes in Chinese e-commerce firm Alibaba and Yahoo Japan.

Takeover talks ongoing for core internet business

The core business is worth $6-8 billion. Yahoo has struggled against Google and Facebook in the competition for online and mobile advertising.

The recruitment of former Google executive Marissa Mayer as CEO has proven ineffective. Mayer has had four years in charge of the company, to little effect.

Activist hedge fund Starboard Value LP last week tried to overthrow the entire Yahoo board, including Mayer. The fund has a long history of activism at Yahoo.

Microsoft has expressed an interest in acquiring Yahoo in the past. In 2008 former CEO Steve Ballmer attempted a $45 billion buyout that was ultimately unsuccessful.

A possible buyout would cost Microsoft far less today. Re/code believes that Yahoo’s board would be willing to sell the core internet business for $10 billion.

Sources cited by Re/code’s claim that Microsoft would not be willing to make a higher bid. Other companies such as AT&T, Verizon and Comcast, have also been in touch with Yahoo about a takeover.

In December Fran Shammo, Chief Financial Officer at Verizon, said that the wireless carrier would consider buying out Yahoo’s core business if it were a good fit.

Microsoft has not made any announcement and is keeping its cards close to its chest.

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While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala. <i>To contact Brendan or give him an exclusive, please contact him at [email protected]</i>
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