Yahoo considers alternative to life with Microsoft

Staff Writers | 12 Feb 2008

The search company may side with AOL over Microsoft.

Yahoo is reconsidering a merger with AOL in an attempt to avoid being acquired by Microsoft, according to a report in The Times.

Microsoft made its unsolicited offer to buy Yahoo for around US$44bn on 1 February.

Yahoo's board has been meeting to consider the offer and look at alternatives, including the sale of Yahoo's advertising business to Google or a possible merger with AOL.

Previous talks of a merger between Yahoo and AOL broke down when neither side was able to agree a price.

Although Microsoft's offer represents a 62 per cent premium on Yahoo's current value, Yahoo's board apparently feels that it undervalues the company as it reflects a five-year low of the stock.

Yahoo has suffered eight consecutive quarters of profit decline, and a loss of market share in the search arena to Google.

It is believed that the Yahoo board has decided to dismiss any offer of less than US$40 per share, which means that Microsoft would have to up its offer by around US$12bn before Yahoo would seriously consider the acquisition.

Regardless of the outcome, many analysts are predicting that any merger will raise antitrust concerns, meaning that it may be some time before a final judgement is reached.

Copyright © 2013 Haymarket Media. All rights reserved. This material may not be published, broadcast, rewritten or redistributed in any form without prior authorisation.
Your use of this website constitutes acceptance of Haymarket Media's Privacy Policy and Terms & Conditions.