Microsoft (MSFT) is in preliminary talks with private equity firms about helping finance a bid to buy embattled Internet company Yahoo (YHOO), according to media reports. Private equity executives approached Microsoft to gauge the communications and computing giant’s financial interest as Yahoo auctions its core businesses, Reuters reported Saturday. Microsoft’s involvement as a potential financial backer of a deal is aimed at preserving its longstanding search and advertising agreements with Yahoo, Reuters said.
Peggy Johnson, head of Microsoft’s partnerships and acquisitions strategy, is part of the Yahoo discussions with private equity firms, according to an earlier report by tech news and analysis site Re/code. Yahoo is seeking $10 billion for its core businesses, the report said. Microsoft declined to comment Sunday. The Redmond, Wash.-based company mounted a previous Yahoo purchase effort led by former chief executive Steve Ballmer, but scrapped that plan in 2008. Sunnyvale, Calif.-based Yahoo’s auction plan potentially includes the company’s advertising, search technology, Yahoo Sports and Tumblr blogging platform. Although Yahoo was an early leader in Internet search, it has struggled to compete as rivals Google and Facebook captured major shares in its online and mobile markets.
Yahoo announced the auction plan in December, after abandoning an effort to spin off its estimated $30 billion-plus stake in Chinese online marketplace company Alibaba (BABA). The cancellation was reportedly sparked by concerns that an eventual sale could trigger a hefty U.S. tax bill. Some investors, including Starboard Value, a New York-based hedge fund that holds a 1.7% Yahoo stake, have complained that the Internet company has moved too slowly to revamp its business model and generate new revenue.
Starboard on Thursday announced an effort to oust Yahoo’s board of directors — including CEO Marissa Mayer — in a potential proxy battle at the Internet company’s annual shareholders meeting later this year. Starboard CEO Jeffrey Smith said telecom giant Verizon Communications (VZ) recently said it had yet to receive information from Yahoo in response to Verizon’s potential bidding interest. Other potential buyers in a Yahoo auction are said to include Alibaba, telecom giant AT&T (T), cable and broadband provider Comcast (CCV), U.S. entertainment powerhouse Walt Disney (DIS) and Japanese telecom company SoftBank Group.