Microsoft is looking at Yahoo’s financial statements after it signed a non-disclosure agreement, according to the New York Times. However, is this a sign of a possible acquisition of Yahoo again, failing to do so in 2008?
The New York Times also points that other potential bidders for the company like Silver Lake and TPG Capital, both private equity firms, have also have access to Yahoo’s books. In addition, Microsoft is rumoured to have held talks to its partners for a possible group bid to buy the struggling web property.
Microsoft attempted to buy out Yahoo once to prop up its then-failing web strategy. In some cases, its online strategy is still a mess, but it has somewhat improved. Bing is now the second-popular search engine in the United States, and its online strategy now includes mobile – especially thanks to Windows Phone 7.
Yahoo, on the other hand, is struggling. While it still attracts large amounts of web visitors, including 81.2 million uniques on its news site, it is financially weak and its leadership is all over the place. In addition, with the rise of Google in the services race, and the popularity of Facebook and Twitter, Yahoo is struggling to remain relevant.
What killed the 2008 deal was Jerry Yang. The “Chief Yahoo” wanted more money despite being a high enough premium for shareholders, given that it had been underperforming. Months of negotiations continued before Microsoft walked away from the deal.
However, the better question is, what the hell does Yahoo offer Microsoft now? In my view, especially since Microsoft bought Skype, Yahoo has no purpose for Microsoft’s online strategy if it does buy it out. It already has a search partnership with them, and already has a much more successful partner in news in the United States – NBC News; as compared to Yahoo’s new deal with ABC News (in America). It will essentially become a white elephant for Microsoft.
Microsoft, if it does want to acquire Yahoo, has a bit of competition. Alibaba, a Chinese e-commerce company, is looking to make its own bid with a couple of private equity firms. It’s a bit weird, especially when Yahoo itself owns 40 percent of the company.