Report: Microsoft might get more Yahoo for less
As a variety of forces swirl to push Yahoo and Microsoft back into each other's arms, some Yahoo shareholders are reportedly pushing for a deal that would see Microsoft acquire Yahoo's search business along with a larger stake, while paying less for Microsoft's shares than was previously offered.
According to a report by All Things D's Kara Swisher, some Yahoo shareholders have floated a proposal that Microsoft acquire a third or more of the company at somewhere between $30 and $32 a share.
As part of the search deal that Yahoo rejected, Microsoft offered to pay $35 a share, but was only offering to buy 16 percent of the company. Yahoo then inked a deal with Google, although that deal is non-exclusive and the parties said they were delaying implementation of the deal for 3 1/2 months to allow for antitrust issues.
News.com first reported on Monday that Yahoo-Microsoft talks were back on and on Wednesday reported that Microsoft CEO Steve Ballmer was weighing the issue. Swisher says her sources say that Microsoft is drawing up a new search proposal, but that formal talks have not taken place.
When Microsoft was looking to buy all of Yahoo, it initially offered $31 a share back in February and later hiked its bid to $33 a share.
During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina. 
Alibaba.com already told Yahoo that they want their shares back from Yahoo if Microsoft comes into the picture, so that is pretty much the death kneel for any Yahoo-Microsoft's unit in Asia unless Microsoft is going to actually try to build one that becomes #1... ( Ha! )
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Uh oh. Yahoo?s Alibaba is antsy about Microsoft; Good luck getting to $40 a share
February 16th, 2008 - Posted by Larry Dignan @ 3:40 am
Link: http://blogs.zdnet.com/BTL/?p=8009
Alibaba, Yahoo?s stronghold in China, is reportedly wary of the Microsoft?s $44.6 billion bid for the Internet portal. Alibaba is so wary of Microsoft that it is looking for more management independence from Yahoo.
According to the Wall Street Journal, Alibaba management is worried that a Microsoft purchase of Yahoo would hurt its links to the Chinese government. Alibaba, a B2B trading site, is a national champion in China and Chinese regulators are already sniffing around about how a Microsoft purchase would affect the company.
This is bad news for Yahoo. Really bad. Why? If Yahoo wants Microsoft to raise its bid, say to $34 a share or even $40 a share, the company has to argue that its core business and holdings in Alibaba are worth more. That case gets a lot harder if Alibaba further distances itself from Yahoo and ensures its independence. Alibaba is prime real estate that Yahoo could even have to divest if Microsoft acquired the company. Yahoo owns about 39 percent of Alibaba.
Good luck getting to $40 a share from Microsoft with those moving parts.
Yahoo CEO Jerry Yang made it clear in his recent shareholder letter that the company views its holdings abroad as one of the reasons it is worth more. In the letter, Yang said:
We have the added value of our substantial, unconsolidated investments in Japan and China. We have substantial positions in Yahoo! Japan, the leader in its market, and Alibaba, which is strongly positioned in China, a market with enormous growth potential.
If Alibaba arranges more independence from Yahoo in the event of a Microsoft merger a nice chunk of that added value goes kaput. And along with it goes the argument that Yahoo is worth more than $31 a share.[ - End]