ADOTAS — Yahoo and Time Warner’s AOL reportedly held talks in recent days in attempt to ward off Microsoft’s Feb. 1 $44.6 billion takeover offer, according to The Telegraph. The goal and contents of the talks are unclear, but anti-trust laws may complicate matters because Google owns a small stake in AOL and has advertising deals with the company.
Microsoft’s bid was spurned by CEO Jerry Yang who argued that Yahoo is positioned to pounce on the burgeoning online ad market – projected to grow from $45 billion in 2007 to $75 billion in 2010. In a recent letter to stockholders, Yang said the offer “is not in the best interests” of stockholders who should bide their time until the company takes advantage of “a huge market opportunity” that Yahoo is “uniquely positioned to capitalize on.”
Investors in Microsoft may not be eager for a deal to go through either. Fund manager Robert Olstein, who owns 1 million Microsoft shares, wrote a letter to chief financial officer Chris Liddell that said, in part, “Under no circumstances should you raise your price,” The Guardian reported. Since the Feb. 1 bid, Microsoft’s share price has declined by more than 10%.
Last week Rupert Murdoch’s News Corp. jumped into the fray with talks that reportedly would involve combining online properties (including MySpace) which would significantly ratchet up both companies presence on the Internet. Murdoch’s firm has not expressed the desire to purchase Yahoo outright, rather it has mapped out a potential deal that would allow Yahoo to integrate and operate the Fox Interactive Media division as well as a cash contribtuion from both News Corp. and an unnamed private equity firm, valuing the investment at about $15 billion. News Corp. would also likely receive a roughly 20% stake in Yahoo, plus the valuation of Yahoo would increase to a difinitive $50 billion.
This is a strong effort by Yahoo to obtain a large investment and either keep the firm or force a raise in the Microsoft bid. Regardless, Yahoo has created options to prove that eventhough the company has been struggling, it still continues to have significant pull in the market.