Microsoft Proposes to Buy Yahoo Search - Chasing Google (
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CHASING GOOGLE
Microsoft said on Sunday that it was talking with Yahoo about an
alternative transaction that did not involve a full buyout after
withdrawing its sweetened $47.5 billion bid for the company on May 3.
Yahoo is a distant second to Google Inc in Web search in the United States, and Microsoft is third.
Combined, Yahoo and Microsoft would have around a 30 percent U.S.
share, compared with Google's roughly 60 percent, according to figures
from research firm comScore. Google's lead is even larger on a global
basis, according to comScore.
The proposal from Microsoft would likely complicate ongoing
discussions between Yahoo and Google. The two companies are still
talking about a possible search advertising partnership, people
familiar with those discussions have told Reuters.
Talks between Yahoo and Microsoft resumed after Microsoft insisted
for two weeks that it had moved on from its pursuit of Yahoo, prompting
shareholders of the Web company to criticize its board for mishandling
negotiations.
Financier Carl Icahn launched a proxy fight last week to force Yahoo
to reopen talks with Microsoft. Icahn, who owns nearly 10 million Yahoo
shares as well as options to acquire another 49 million shares,
formally filed on Monday the preliminary proxy to nominate 10 directors
to Yahoo's board.
A person familiar with Icahn's thinking said on Sunday that an
alternative deal for Yahoo, rather than a full acquisition, would
prompt the investor to push Yahoo to do a deal with Google. Icahn did
not comment on the talks between Microsoft and Yahoo in his filing on
Monday.
For its part, Alibaba Group, the private holding company whose
assets include Alibaba.com, has been lining up investors to help it buy
back the Yahoo stake, sources told Reuters earlier.
Yahoo's core franchise stems from the roughly 500 million Web users
who pass through its network of Internet media properties each month.
Major attractions include Yahoo Mail, news, sports, entertainment and
its Flickr.com photo site.
It generates most of its revenue through sales of display
advertising to those visitors, as well as making an increasing push to
sell ads on non-Yahoo sites. As the No. 2 provider of Web search
services, Yahoo also sells ads alongside search results and on a
variety of affiliated sites.
(Additional reporting by Eric Auchard in New York, Daisuke
Wakabayashi in Los Angeles and Edwina Gibbs in Tokyo; editing by Carol
Bishopric, Jeffrey Benkoe, Richard Chang)
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