From The Sunday Times
November 30, 2008
Microsoft in $20bn Yahoo deal
John Waples
http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article5258258.eceSOFTWARE giant Microsoft is in talks to acquire Yahoo’s online search business for $20 billion (£13 billion).
The proposal forms the centrepiece of a complex transaction that would see Microsoft support a new management team to take control of Yahoo. But there is no intention of Microsoft tabling another takeover bid for the web giant, after its aborted $47.5 billion offer this summer.
It is thought that Jonathan Miller, ex-chairman and chief executive of AOL, and Ross Levinsohn, a former president of Fox Interactive Media, have been lined up to lead the new management team. Senior directors at Microsoft and Yahoo are understood to have agreed the broad terms of a deal, but there is no guarantee that it will succeed.
However Yahoo is under intense pressure from its investors after rejecting the offer from Microsoft. This valued each share at $33. Since then Yahoo’s price has tumbled to a low of $9 per share.
Analysts say it is an opportune time for Microsoft and Yahoo to work on a new deal. There is a management vacuum at Yahoo after Jerry Yang, the group’s co-founder, said this month that he will step down as chief executive as soon as the board finds a successor. He opposed the earlier Microsoft deal and an advertising alliance with Google that he championed broke down because of competition fears.
Under the terms of the proposed transaction, Microsoft would provide a $5 billion facility to the Miller and Levinsohn management team. The duo would raise an additional $5 billion from external investors.