Microsoft and Yahoo! deal back on the cards

Microsoft is understood to be considering a fresh bid for Yahoo! after Jerry Yang announced his plans to step down as CEO of the internet search company.

Yahoo!’s chairman, Roy Bostock released a statement late on Monday, saying Yahoo! was “deeply grateful” to Yang but would be searching for a new CEO who could “take the company to the next level”.

At the time, Yang said: “I have always sought to do what is best for our franchise. When the board asked me to become CEO and lead the transformation of the company, I did so because it was important to re-envision the business for a different era.”

However, Yang has been under intense scrutiny in his role as CEO, particularly after Microsoft’s failed takeover bid in May this year (see Microsoft Offers To Buy Yahoo! For $44.6bn).

Microsoft’s chief, Steve Ballmer, recently rejected speculation that it may go in to takeover talks with Yahoo! again, following Google’s recent decision to terminate a possible advertising partnership with the search giant (see Microsoft dismisses potential deal with Yahoo!).

Just weeks ago, Ballmer said: “We are not interested in going back and re-looking at an acquisition. I don’t know why they would be either, frankly.”

However, investors are now predicting that Microsoft will take advantage of its rival’s low share price and weak position.

Ben Schachter, an internet analyst with UBS Investment Research, said: “We still believe Microsoft will eventually own Yahoo – Jerry moving out of the CEO role may accelerate this.

“Yahoo! is a key strategic asset in the online space, and given the scarcity of key players of size, we see value here not reflected in the stock’s current valuation,” he added.

If Microsoft does make an offer, it is expected to be significantly lower than its previous bid of $31 a share.

Microsoft: 0870 60 10 100 www.microsoft.com/uk Yahoo!: 020 7808 4200 www.yahoo.co.uk