Microsoft Considering Yahoo Takeover?

Yahoo shares leap as reports spread

Yahoo’s share price jumped almost 10 percent amid rumors that Microsoft is planning a second attempt to buy the company, three years after its original bid was rejected, Reuters reports.

Microsoft is the latest of several companies linked with Yahoo; takeover speculation has surrounded Yahoo since it fired its CEO Carol Bartz last month, as reported in Adweek. Potential suitors include private equity firm Silver Lake, Providence Equity Partners, Chinese e-commerce firm Alibaba, and News Corp. Reuters also names Russian technology investment firm DST Global and private equity firm Hellman & Friedman as potential buyers, while the BBC reports that Vodafone is considering a bid as well.

Microsoft launched a $44.6 billion hostile bid for Yahoo in 2008, which was rebuffed by Yahoo.

But Microsoft’s board is apparently divided over the wisdom of bidding again for Yahoo, according to Reuters. Some think it will deliver a “knockout blow” to rival AOL, whereas others see little potential for growth. "Yahoo's value hasn't grown in years,” an unnamed Microsoft executive told Reuters. “Some executives feel we should buy something that is more forward-looking”.

Bloomberg goes further to quell suggestions of a Microsoft-Yahoo deal. Citing unnamed sources from both companies, it says that Microsoft “isn’t anywhere close to making an offer” for Yahoo, while Yahoo “doesn’t regard Microsoft as a serious bidder.”

The Guardian also The reports that any merger between Microsoft and Yahoo is likely to face regulatory scrutiny and fierce lobbying from Google.

Meanwhile, the Hong-Kong based Alibaba Group is facing its own potential hurdles in a bid for Yahoo—and according to the New York Post, CEO Jack Ma is trying to decide whether it’s worth the trouble.

Sources told the Post that the U.S. government might not allow Chinese-owned Alibaba to acquire a major American Internet company. In the past, the Treasury Department and its Committee on Foreign Investment in the United States has blocked other foreign takeovers that it deemed a threat to national security. But in this case, the issue is privacy: Foreign investment expert Gary Hufbauer told the Post that the bid would raise concerns as to whether it would be wise to let Alibaba, which is heavily influenced by the Chinese government, have access to Yahoo’s huge store of consumer data.

If Alibaba went ahead with the bid, Hufbauer said, it would definitely be subject to a review from the committee, and the chances of passing would only be around 50-50. Ma is reportedly “dumbfounded” at how much scrutiny he would have to face from the U.S. government, and is now reconsidering whether to continue with the bid at all.