Microsoft has reached an agreement which allows it to peruse the books of Yahoo! as it considers an investment in the search engine giant. This is according to a person briefed on the matter, who told Bloomberg that Yahoo!'s advisers asked that bids be submitted next week.
Bidders, however, are likely to offer to buy only a minority stake in the firm, as they have not arranged financing for a full buyout. And Microsoft, the sources claimed, may help finance a bid rather than try to buy Yahoo outright.
As Microsoft considers its position, private-equity firms TPG Capital and Silver Lake have signed non-disclosure agreements with the world's largest software firm. It has been suggested that Microsoft is prepared to join others investors in a bid to safeguard its web-search partnership with Yahoo. Furthermore, Microsoft is reportedly willing to bridge any financing gap a buyout would call for.
Under Yahoo!'s former Chief Executive Officer Carol Bartz, Microsoft signed a ten-year agreement to provide search- technology to Yahoo sites. The overarching purpose of this was to help both companies to compete with Google, the market leader in US search-related advertising.
Microsoft, of course, tried to acquire Yahoo! in 2008, offering to pay as much as $47.5 billion, or $33 per share, for the firm. Instead, it entered into a partnership with Yahoo! back in 2009 and has clearly been impressed by the operation.
Despite the speculation, Frank Shaw, a spokesman for Microsoft, and Dana Lengkeek, a spokeswoman for Yahoo, have both rejected the opportunity to make a public comment.
Last month, it was suggested that KKR & Co and Blackstone Group LP are among a number of private- equity firms considering possible bids for Yahoo!.
Meanwhile, Alibaba Group Holding Ltd, China's biggest ecommerce company, has already confirmed that it is interested in acquiring Yahoo!.
News of Microsoft's potential investment saw a slight decline in the firm's shares, while Yahoo's stock rose marginally. Earlier this year, Microsoft acquired VoIP provider Skype in a $5 billion deal, prompting questions from market analysts who pointed to the fact it is currently a losing-making enterprise.
Despite this, Microsoft Co-Founder Bill Gates recently defended the move, saying it represented terrific business for both of the parties involved. And despite the criticism, Mr Gates said that he is satisfied that the deal will ultimately be seen as shrewd business for Microsoft.