Microsoft Corp is contemplating a bid for Yahoo Inc, resurfacing as a prepatent buyer after a bitter and unsuccessful fight to take over the Internet company in 2008, sources close to the situation said on Wednesday.
Microsoft joins a host of other companies looking at Yahoo, which has a market value of about $18 billion and is readying financial pitch books for potential buyers, they said.
The sources said, Those companies include buyout shops Providence Equity Partners, Hellman & Friedman and Silver Lake Partners, as well as Chinese e-commerce giant Alibaba and Russian technology investment firm DST Global, .
Yahoo shares jumped 10.1 per cent on the news to close at $15.92 on Nasdaq. Microsoft shares ended 2.2 per cent higher at $25.89 after rising about 3 per cent earlier.
No decision has been made and a bid may not materialize as there are internal divisions at the software company on whether it should pursue Yahoo again, a high-ranking Microsoft executive said.
One camp inside Microsoft is hot for the deal, believing that it would obliterate AOL Inc as a competitor and create a strong Web portal that can offer better products to audiences, advertisers and end users, the executive said.
"Yahoo's value hasn't grown in years, and some executives feel we should buy something that is more forward-looking," said the executive who spoke on condition of anonymity.
Any auction process for Yahoo is still in the early stages, and the company's financial advisers -- Goldman Sachs and Allen & Co -- are preparing to send financial information to potential bidders, sources have said previously.
BIG BITE
Shortly after ousting Carol Bartz as CEO in early September, Yahoo said it was exploring strategic alternatives after receiving "inbound interest" from a number of parties.
The once-dominant Internet pioneer is pursuing parallel tracks, sounding out deal options as well as engaging in a search for a new CEO.
Yahoo would be a big bite for any single private equity firm, especially at a time when financing markets for leveraged buyouts have dried up.
"There are many reasons why this thing probably makes sense," said Sid Parakh, analyst at fund firm McAdams Wright Ragen. "If you strip out the variety of assets Yahoo owns, you are pretty much paying nothing for the core business."
