Microsoft’s $20billion offer for Yahoo search
In a recent report published Saturday by the Times Online, Microsoft is in talks to acquire Yahoo‘s online search business for $20 billion.
According to John Waples, Microsoft will not get the whole of Yahoo, but the “complex” deal would let Microsoft partake in the company’s management structure and get hold of 30 percent of Yahoo overall.
That has obviously been Microsoft’s target — to hit a search deal with Yahoo, increasing its market muscle against Google without all the complexities of a total acquisition.
From Times Online:
Under the terms of the proposed transaction, Microsoft would provide a $5 billion facility to the Miller and Levinsohn management team. The duo would raise an additional $5 billion from external investors.
This cash would be used to buy convertible preference shares and warrants which would give it a holding in excess of 30% of Yahoo.
The external investors would also have the right to appoint three of Yahoo’s 11 board directors. The talks with Yahoo involve Microsoft obtaining a 10-year operating agreement to manage the search business. It would also receive a two-year call option to buy the search business for $20 billion. That would leave Yahoo to run its own e-mail, messaging, and content services.
Senior execs at both MSFT and Yahoo have reportedly agreed on some of the terms, but the deal hasn’t been finalized—and may not be approved at all, The Times’ sources say.
It is expected that the operating agreement would boost Yahoo’s income by as much as $2 billion per year.
For me, this all sounds confusing… but I’m still eager to watch the deal unfold if it comes to pass.