{{ searchResult.published_at | date:'d MMMM yyyy' }}

Loading ...
Loading ...

Enter a search term such as “mobile analytics” or browse our content using the filters above.

No_results

That’s not only a poor Scrabble score but we also couldn’t find any results matching “”.
Check your spelling or try broadening your search.

Logo_distressed

Sorry about this, there is a problem with our search at the moment.
Please try again later.

The on-and-off again rumors of a Microsoft-Yahoo deal are back in the news.

TechCrunch's Michael Arrington, citing unnamed sources, reported on Wednesday that a group of "well known Silicon Valley executives and top investment bankers" was working to arrange an acquisition of Yahoo that would value the company at $20bn.

That would represent about a 20% premium to Yahoo's value currently but still far less than the value Microsoft placed on the company before its original acquisition offer was rejected.

The interesting part of this rumor: according to Arrington, Microsoft would provide most of the financing for the deal "in return for a fixed return on the debt that is tied to Yahoo’s future cash flow."

Arrington's sources indicated that Yahoo's search business would be sold to Microsoft after the acquisition was completed and new management installed. Microsoft currently has a cash pile of $23bn and while it could finance a good part of a $20bn acquisition, the question is - why would it?

And so it is that like many of the Microsoft-Yahoo rumors before it, this rumor appears to be just that - a rumor.

Bloomberg cited sources close to Microsoft who are familiar with its plans as stating that Microsoft was not in discussions to finance a Yahoo acquisition.

AllThingsDigital's Kara Swisher spoke to one of her sources close to Microsoft, who told her the same thing:

"We can deal directly with Yahoo, which is moving through a process to get a new CEO, and when the time is right, we will deal with their leadership. Getting involved in some convoluted deal with others in control…it’s idiotic."

In short, this is one rumor that doesn't make a lot of sense for Microsoft. And, as analysts quoted by Bloomberg pointed out, at this point such an offer wouldn't make a whole lot of sense for Yahoo shareholders either. Most would probably demand a more significant premium given the hammering Yahoo's shares have taken following Microsoft's failed bid and the collapse of its deal with Google. And with a new CEO on the way, they have real reason to hope that change is on the way. After all they've been through, waiting to see what happens probably doesn't seem all that bad.

In short, it appears that bloggers and the news media are still far more interested in a Microsoft-Yahoo hook-up than Microsoft and Yahoo are. My suspicion is that there's still interest in some sort of marriage on both sides but given the circumstances and the economy, both companies realize that they need to spend some time apart before they revisit their relationship. That's probably for the best.

Patricio Robles

Published 9 January, 2009 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2392 more posts from this author

Comments (0)

Comment
No-profile-pic
Save or Cancel
Daily_pulse_signup_wide

Enjoying this article?

Get more just like this, delivered to your inbox.

Keep up to date with the latest analysis, inspiration and learning from the Econsultancy blog with our free Daily Pulse newsletter. Each weekday, you ll receive a hand-picked digest of the latest and greatest articles, as well as snippets of new market data, best practice guides and trends research.