Disputed Report Says Microsoft To Acquire Yahoo’s Search Business—Any Truth To It?

12/1/08Follow @gthuang

Yes, they’re at it again. Or are they? For those who didn’t spend their holiday weekend following the latest twists in the Microsoft-Yahoo acquisition soap opera, let’s get you up to speed on whether there’s any substance to the latest reports.

On Saturday, the UK-based Times Online (aka The Times of London) reported that Microsoft was in talks to acquire Yahoo’s online search business, supposedly for $20 billion. The report, which didn’t cite its sources, suggested a new management team for Yahoo would be led by Jonathan Miller, the ex-chairman of AOL, and Ross Levinsohn, a former president of Fox Interactive Media. It also said Microsoft would provide a $5 billion facility to the management team, who “would raise an additional $5 billion from external investors.”

The report was picked up all over, and then quickly disputed. Levinsohn was quoted by VentureBeat as saying “No truth to it. News to us.” The Wall Street Journal’s All Things Digital blog said that Levinsohn denied the report as “total fiction.” Reporters and analysts have also noted that Yahoo’s total market cap is only $16 billion, so the reported $20 billion price tag doesn’t add up. Meanwhile, neither Microsoft nor Yahoo are commenting.

But no smoke without a fire, right? Just because the Times report is being disputed doesn’t mean there isn’t some sort of deal in the works. Back on November 19, at a shareholder meeting, Microsoft CEO Steve Ballmer said a partnership with Yahoo in the search market remains “an interesting possibility,” but that there were no talks at that point. Surely the price of any such deal is only getting more attractive for Microsoft, which withdrew its $45 billion buyout offer for all of Yahoo in May.

As of this afternoon, the Times has not posted any clarification or update to the story on its site.

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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