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Microsoft is reportedly in talks with potential Yahoo investors about financing a buy out of the beleaguered company,
Microsoft is keen to preserve its relationship with the once-great Yahoo, as the two firms have a host of search and advertising agreements in place. Reuters reported that private equity firms interested in Yahoo approached Microsoft, quoting ‘a person familiar with the situation’. The source added that talks are ‘preliminary’ in nature.
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Yahoo has been under sustained pressure from activist investors and last month, the company folded, saying it would auction off its core internet business, including search, mail and news, as well as its stake in Alibaba.
Bing, Microsoft’s search engine, has finally started turning a profit, and is seen as the only viable contender to Google’s dominance in search. Bing serves up results and ads for 51% of Yahoo searches, and so it is in Microsoft’s best interests to keep Yahoo’s services alive and well.
Other companies said to be interested in Yahoo are Verizon, AT&T, Comcast and Alibaba.
According to the Wall Street Journal, Yahoo hopes to quickly sort the wheat from the chaff, and has given potential suitors until April 11 to submit preliminary bids for core assets.
Adding fuel to the fire, activist hedge fund, Starboard Value, has moved to oust the entire board of Yahoo, including CEO Marissa Mayer
“We believe that Yahoo is deeply undervalued and opportunities exist within the control of management and the Board of Directors to unlock significant value for the benefit of all shareholders,” said Jeff Smith, CEO of Starboard.
“Unfortunately, as we have outlined in previous letters, we have been extremely disappointed with Yahoo’s dismal financial performance, poor management execution, egregious compensation and hiring practices, and general lack of accountability and oversight by the Board. We believe the Board clearly lacks the leadership, objectivity, and perspective needed to make decisions that are in the best interests of shareholders.”
Yahoo stated that it would review all nine members nominated by Starboard and respond accordingly.