Ballmer: I don't want all of Yahoo

Microsoft Corp is not looking to bid to buy all of Yahoo Inc but is in talks about other types of deals with the US No 2 search engine, Microsoft CEO Steve Ballmer said yesterday.

"We are not bidding to buy Yahoo," Ballmer said at the launch of Microsoft's new research and development center in Israel.

"Yet, we are trying to have discussions about deals with Yahoo that might create value, but not a whole acquisition of the company," he said without elaborating further.

Earlier this month, Microsoft walked away from a proposal to acquire Yahoo for $47.5 billion, or $33 per share, after Yahoo rebuffed the offer, saying it would only settle for $37 a share.

Microsoft has now made an alternative offer, proposing to buy Yahoo's search business and take a minority stake in the Web firm, a person familiar with the discussions told Reuters this week.

Should a deal be completed, it would forge an alliance between the two companies that would represent an alternative means of competing with rival Google Inc, which has turned into an online advertising powerhouse.

For its part, Yahoo has said it was considering a "number of value maximizing strategic alternatives" and would evaluate any proposal made by Microsoft.

Yahoo on Sunday confirmed with Microsoft that it was not interested in pursuing an acquisition of all of the company but it remained open to pursuing any deal in the best interest of stockholders.

Investor Carl Icahn last week launched a proxy battle in order to pressure Yahoo to agree to be sold to Microsoft.

A number of other large Yahoo shareholders have since said they would back Icahn.

Icahn wins support

Third Point LLC, a $5.7 billion hedge fund headed by activist Dan Loeb, has recently accumulated a stake of over 5 million shares in Yahoo Inc and is supporting Icahn's proxy battle, a source familiar with the matter said on Tuesday.

Third Point, which held 1 million shares in Yahoo as of March 31, may build a stake of up to 10 million shares in the company, the source said.

Another investor said he was backing Icahn. Oil investor T. Boone Pickens told broadcaster CNBC he has acquired 10 million shares in Yahoo, saying: "(Icahn) jumps in first, I jump in behind him."

For his part, Loeb "strongly supports Icahn and supports his slate and thinks that he is shining a bright light on the botched process at the Yahoo board in negotiating the deal with Microsoft," said the source, who requested anonymity because Loeb's position has not been publicly disclosed.

Loeb, known for his acerbic letters to senior officials of companies he deems to be underperforming, believes Yahoo should be sold to Microsoft.

"They haven't laid out a game plan that gets you to the value of $33 to $34 per share on a stand-alone basis," this source said.

Agencies

(China Daily 05/22/2008 page17)