Bloomberg News

Yahoo Shares Surge on Report That Microsoft May Make Offer

October 05, 2011

(Updates share price starting in first paragraph.)

Oct. 5 (Bloomberg) -- Yahoo! Inc., which is considering strategic options in the wake of ousting its chief executive officer last month, rose 10 percent after Reuters reported that Microsoft Corp. may make a bid.

Microsoft might enlist a partner to go after Yahoo, Reuters reported today, citing sources close to the situation. Yahoo spurned a $47.5 billion bid from Microsoft in 2008. No decision has been made to come back to the negotiating table, and there are internal divisions at Microsoft over the idea, Reuters said.

Yahoo takeover speculation has intensified over the past month, following the board’s decision to fire CEO Carol Bartz and embark on a review of its options. Yahoo, the biggest U.S. Web portal, has struggled to revive growth and beat back competition from Facebook Inc. and Google Inc.

Yahoo shares rose $1.46 to $15.92 at 4 p.m. New York time in Nasdaq Stock Market trading, marking the biggest one-day gain since October 2008. The stock had dropped 13 percent this year before today.

Dana Lengkeek, a spokeswoman at Sunnyvale, California-based Yahoo, declined to comment to Bloomberg News. Frank Shaw, a spokesman for Redmond, Washington-based Microsoft, didn’t immediately respond to a request for comment.

‘Multiple Parties’

Yahoo said in a September memo to employees that its advisers have fielded inquiries from “multiple parties” interested in unspecified options. Last week, Alibaba Group Holding Ltd. Chairman Jack Ma said he’s “very interested” in buying Yahoo, which owns about 40 percent of his company.

The private-equity firm Silver Lake also has discussed a possible bid for Yahoo, part of a deal that may include Alibaba and Russia’s Digital Sky Technologies, people with direct knowledge of the matter have told Bloomberg.

The Silver Lake group contacted Yahoo and its advisers in recent weeks to inform them of a possible offer, said one person, who declined to be identified because the talks are private. The discussions are still at an early stage and it’s not certain that the group will agree to make a bid, the people said.

--With assistance by Dina Bass in Seattle and Danielle Kucera in San Francisco. Editors: Jillian Ward, Nick Turner

To contact the reporter on this story: Nick Turner in San Francisco at nturner7@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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