Report: Microsoft mulls another run at acquiring Yahoo

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More than three years after Microsoft (NASDAQ:MSFT) made an unsolicited $44.6 billion bid to acquire Yahoo (Nasdaq: YHOO), the software giant is reportedly mulling another run at the struggling digital services provider.

Citing sources familiar with the matter, The Wall Street Journal reports Microsoft is huddling with private-equity firm Silver Lake Partners and one of its investors, the Canada Pension Plan Investment Board, to put together a proposal to purchase Yahoo. Microsoft would contribute several billion of funding, with additional financing being arranged by banks--Silver Lake and the CPPIB would fund the remainder of the bid, which is expected to be less than what Microsoft would contribute.

The Journal report adds that at least nine private-equity firms are studying a Yahoo buyout. The Microsoft offer is one of various proposals under discussion. Potential bidders are still crunching the numbers and have not yet determined whether they will proceed with an offer and if they could abandon their efforts if financing falls through or the deal proves too complex. Insiders say they expect the deal to cost between $16 and $18 per share--Yahoo closed Wednesday at $15.94 on the Nasdaq Stock Market, translating to a market capitalization of $20 billion.

Microsoft and Yahoo announced a 10-year search and advertising agreement in mid-2009, combining their complementary strengths and platforms in an attempt to topple segment leader Google (NASDAQ:GOOG). At the time, Yahoo said it would shift its focus to mobile services technology, display advertising and content. The deal failed to transform Yahoo's business as expected, and last month, the company announced that its board of directors removed Carol Bartz from her role as CEO, appointing Timothy Morse--who joined Yahoo in June as CFO--as its interim chief.

Earlier this week, Microsoft CEO Steve Ballmer declined to comment whether or not the company would consider another Yahoo acquisition, but he expressed relief that the original deal did not happen prior to the economic downturn. "Sometimes, you're lucky," Ballmer said.

For more:
- read this Wall Street Journal article

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