Microsoft Reopens Talks With Yahoo!

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Microsoft Reopens Talks With Yahoo!

On Sunday 18 May 2008, two weeks after withdrawal of its offer to Yahoo!, Microsoft has issued a statement, regarding its continued efforts to improve their online services and advertising business.

In a brief formal announcement Microsoft said have resumed talks with Yahoo! The talks are not about acquiring Yahoo! but rather to find an alternative transaction that would help Microsoft to improve its services, and also help Yahoo! in the bargain.

Microsoft + Yahoo! logoHowever, Microsoft have also mentioned that the company reserves the right to reconsider the original option of buying over Yahoo! entirely, depending on the circumstances that may arise in the near future, following talks with Yahoo! or the shareholders of Yahoo! or Microsoft or any other concerned party.

This change of sentiment, following the statements issued earlier by Microsoft on withdrawal of their original offer, may very likely have something to do with the ongoing shareholder unrest following the failure of the original deal, especially the threats issued by Carl Icahn to have the entire board of directors of Yahoo! replaced during the next shareholder meeting.

According to the Financial Times, Steve Ballmer, Microsoft’s chief executive, had highlighted Microsoft’s interest in the Yahoo! search business when he abandoned his pursuit of a full acquisition. In a letter to Yahoo at the time, he said Microsoft had dropped its offer partly because of a potential search advertising alliance between Yahoo and Google, which had been under discussion for some weeks.

Yahoo! has also issued statements to the effect that they are willing to consider any option that will maximise their strategic value. As of now nothing has been finalised.