The issue has been fueled again; Microsoft has taken a step further towards Yahoo buyout by signing a confidential agreement. The agreement will help Microsoft management in gathering more information about Yahoo business, revealed by a source familiar with the matter. The move is being considered as a pre-buyout exercise to ensure the best gains for Yahoo as well as Microsoft.
According to Reuters, Microsoft has agreed to signed the agreement to make strong observation about Yahoo business and its future potential. Microsoft has joined hands with several private equity firms which are also looking over Yahoo’s year book and its operations.
Sitting on a cash pile of $57 billion, Microsoft is showing great interest to pocket Yahoo. However, such huge cash pile doesn’t guarantee the sole bid from Microsoft for Yahoo. It is also being speculated that Microsoft may go for Yahoo along with a joint partner. This lowers the risk as Yahoo’s market share in Internet industry is on constant decline for last few years and buying its 100% share may result in another MySpace – News Corp deal in future.
Microsoft intention to buy Yahoo is quite clear; Company had made an unsuccessful attempt to buy Yahoo in 2008. Deal fell apart due to Yahoo’s higher cost-per-share expectations. However, the situation is quite different now. Yahoo’s open market shares are floating at just half of the cost since 2008 and company is facing constant market decline with every passing quarter. Its Senior Executives have left the company and many have been fired by the companies’ authority. All such aspects setup a perfect favorable platform for Microsoft to grab Yahoo.
However, there is several other private equity firms like KKR and TPG who have also signed confidential agreement with Yahoo and are looking to buy 20 percent of Yahoo shares in coming days, as per Reuters. Reports are also there about AOL who is keen to have controlling stake in Yahoo.
one of the most prominent private equity firm Silver Lake has also signed a nondisclosure agreement with Yahoo to restrict other groups to have tie-up with them. However, many of the equity firms have criticized Yahoo for pushing such NDA.
It’s an interesting fact to know that despite of unsuccessful attempt to take over Yahoo in 2008, Microsoft has not lost its hopes. They signed a deal with Yahoo in 2009, which allows Microsoft Bing to power Yahoo search results and provide Microsoft a 12 percent of ad revenue of Yahoo. Also, both the companies have settled down on another deal for advertisement few weeks back.
This shows that Microsoft never left the hope to conquer Yahoo and silently moving closer to grip Yahoo with a perfect sense of its business model. What do you think about such possible buyout of Yahoo to Microsoft ? Do share your views with us in comment box.