Microsoft in Talks with Private Equity Firms Interested to Buy Yahoo

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The executives of Microsoft Corporation (NASDAQ:MSFT) are engaged in early discussions with private equity firms interested in acquiring Yahoo! Inc. (NASDAQ:YHOO), according to Reuters based on information from a person familiar with the situation.

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The private equity firms approached Microsoft regarding the possibility of contributing to financing the Yahoo acquisition. The discussions between the software giant and the private equity firms are preliminary, according to the source.

Peggy Johnson, the head of partnerships and acquisitions at Microsoft was reportedly part of the team leading the discussion with the potential buyers of Yahoo. In 2008, former Microsoft CEO made a hostile bid to acquire Yahoo for $45 billion, but did not succeed.

Microsoft has a longstanding search and advertising agreements with Yahoo, which is struggling to boost its share for online advertisers—Google and Facebook (NASDAQ:FB) get a huge portion of the pie. The person said the software company is focused on maintaining its relationship with the troubled technology company.

Yahoo is selling its internet core business

Yahoo is auctioning its internet core business including search, mail and news websites and also considering selling its non-core assets worth up to $3 billion.

The technology company is pursuing a strategic plan to drive growth amid pressure from activist investor, Starboard Value.

Fran Shammo, the chief financial officer of Verizon Communications (NYSE:VZ) previously indicated that the company may consider buying Yahoo’s core internet business if it was a good fit for the wireless carrier.

Last month, it was reported that Time Inc (NYSE:TIME) was considering an offer to acquire Yahoo’s internet core business and has been contacting bankers to pursue a deal.

Starboard Value launches proxy fight against Yahoo

Starboard Value launched a proxy fight to oust the entire Yahoo Board. The move came after the technology company appointed two independent directors earlier this month.

In a letter to Yahoo shareholders, the activist investor said it was extremely disappointed with the technology company’s dismal financial performance, poor management execution, egregious compensation and hiring practices, and general lack of accountability and oversight by the Board.

Starboard Value said the proxy fight was necessary because “a significant change is desperately needed to hold management accountable and properly oversee any operational turnaround plan, separation, or sale process.” The activist investor would nominate nine highly-qualified executives during the company’s 2016 Annual Meeting.

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