Microsoft, the world's biggest software maker, revived the possibility of a deal with Yahoo to challenge Google after failing to agree on a merger.
Microsoft said yesterday it's exploring an agreement with Yahoo that stops short of a full takeover. Microsoft didn't elaborate on the proposal and said it "reserves the right" to reconsider its bid to buy all of Yahoo.
The proposal gives Yahoo, owner of the second-most popular web search engine, another chance to forge an agreement with Microsoft as investor Carl Icahn threatens to oust the Internet company's board.
Yahoo Chief Executive Officer Jerry Yang has demanded a higher price than Microsoft's $47.5 billion offer, prompting Microsoft CEO Steve Ballmer to abandon talks on May 3rd.
"Many analysts expected Microsoft to retrace its steps and seek a deal with Yahoo," said Raffaella Sommariva, a fund manager at AZ Fund Management SA in Luxembourg, which oversees the equivalent of $14.5 billion.
"An accord would be a great opportunity for both of them."
Yahoo said in a statement yesterday that it is open to pursuing any transaction in the best interest of investors. The company said it will continue to consider all of its options, including any proposal from Microsoft.
Yahoo rose 82 cents, or 3 per cent, to the equivalent of $28.48 at 9:31 a.m. in German trading from the US close of $27.66 on May 16th. Microsoft fell 20 cents to $29.79 in Germany from the US close of $29.99 last week, while Google lost 66 cents to $579.41 in European trading.
The agreement Microsoft and Yahoo are discussing involves Yahoo carrying search advertisements from Microsoft, the Wall Street Journal said yesterday, citing people familiar with the matter.
Bloomberg