Microsoft plan on Yahoo involves buying search: source

Reuters
Microsoft plan on Yahoo involves buying search: source
Monday May 19, 4:59 pm ET
By Anupreeta Das

BOSTON (Reuters) - Microsoft Corp (NasdaqGS:MSFT - News) has proposed an alternative deal to Yahoo Inc (NasdaqGS:YHOO - News), a complex transaction that would include just buying Yahoo's search business, rather than a full-blown buyout, a person familiar with the discussions said on Monday.

As part of the deal, Microsoft would also buy a minority stake in what remains of the company after Yahoo sells its Asian assets, the source said.

The proposal is little more than an outline reflecting Microsoft's thinking, and does not yet put a value on Yahoo's search business, said the source, who was not authorized to speak on the record because the discussions are confidential.

Microsoft and Yahoo representatives declined to comment.

On Sunday, Microsoft said it was talking with Yahoo about an alternative transaction after withdrawing its sweetened $47.5 billion bid for the company on May 3.

The renewed talks do not include buying all of Yahoo, Microsoft said.

Yahoo is the No. 2 U.S. search engine after Google Inc (NasdaqGS:GOOG - News).

Yahoo also owns about 40 percent of China's Alibaba, and Yahoo Japan, assets it considers strategic.

But Alibaba has been lining up investors to help it buy back the Yahoo stake, sources told Reuters earlier.

Under the new proposal, Microsoft would take a passive minority stake in Yahoo after it spins off the Asian assets, the source said.

Apart from the search unit, which is Yahoo's strongest franchise, the Web pioneer also owns a display advertising business and several Internet media properties, including Yahoo News, photo sharing site Flickr.com and Yahoo Mail.

Microsoft shares closed Monday down 1.8 percent at $29.46, while Yahoo closed up nearly 2 cents at $27.68, both on Nasdaq.

(Reporting by Anupreeta Das; editing by Carol Bishopric/Jeffrey Benkoe)