Microsoft and Yahoo! in secret talks

20 Jan 2009

Reports are emerging that Microsoft CEO Steve Ballmer and the chairman of Yahoo! Roy Bostock have met in New York this week, sparking speculation that an acquisition may be back on.

In recent days, prominent New York blog site’s Valleywag subsidiary reported that Microsoft Ballmer and Roy Bostock were spotted in Manhattan’s Time Warner Center.

Last year, Microsoft abandoned its US$44.6bn takeover plans for Yahoo! after previous CEO Jerry Yang and the then board bungled the deal.

In the aftermath, Ballmer raged: “We won’t pay a dime for Yahoo!”

Shareholders were outraged and legendary corporate raider Carl Icahn led a revolt that saw new members added to the board and the subsequent departure of Yang.

In recent weeks a new CEO – Carol Bartz – joined Yahoo!, and last week she admitted that she had held telephone conversations with Ballmer, who repeated he is interested still in buying Yahoo!’s search business.

Before Christmas, Ivory Investment Management LP – which has 21.4 million shares, or 1.5pc of shares outstanding in Yahoo! –proposed in a letter to Yahoo!’s board of directors a salvage deal with Microsoft.

Ivory urged Yahoo!’s board sells its search business to Microsoft for an upfront price of US$15bn.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years