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Yahoo rejects latest move by Microsoft to acquire search engine business

Antony Savvas

Yahoo has rejected another move by Microsoft to buy its main search engine business, and has suggested Redmond instead put up enough cash to buy the whole company if it's that keen on an acquisition.

Yahoo has rejected a joint proposal from Microsoft and activist Yahoo investor Carl Icahn for a complex restructuring of Yahoo, that would include the acquisition of Yahoo's search business by Microsoft.

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Yahoo is already in the process of restructuring its business and has recently signed a search engine advertising deal with Google. Both moves followed Microsoft's recent failed bid to buy the company.

The latest proposal was made on Friday evening (11 July) and Yahoo was given less than 24 hours to accept the proposal. Yahoo said, "the fundamental terms of which Microsoft and Mr Icahn made clear they were unwilling to negotiate."

Yahoo said the Google search engine deal offered better value to the firm for that part of the business, and that Friday's offer would preclude any future sale of Yahoo as a complete business.

The deal would have also led to the current board being replaced and the leading executives being shown the door, which Yahoo said would have destabilised the business.

Yahoo chairman Roy Bostock said, "This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo's stockholders in mind.

"Clearly, Microsoft, having failed to advance in search, is aligning with the short-term objectives of Mr Icahn to coerce Yahoo into selling its core strategic search assets on terms that are highly advantageous to Microsoft, but disadvantageous to Yahoo stockholders."

Yahoo said a transaction to acquire the whole company would be much more straightforward and involve far less risk than the new proposal or any similar alternative.

Yahoo said a complete acquisition could still be negotiated and executed prior to its 1 August shareholder meeting. Yahoo will still sell if Redmond comes up with $33 per share, a price Microsoft previously rejected.

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