Yahoo! investor floats new Microsoft deal

by Staff, Brand Republic 10-Oct-08, 08:50

SAN FRANCISCO - A venture capitalist with a small stake in Yahoo! is attempting to revive interest from Microsoft by claiming that it can buy Yahoo!'s search business for $2bn less than it offered in July.

Mithras Capital, which owns 0.14% of Yahoo!, said it was going to write to both companies with the proposal last night.

The proposal envisions Microsoft buying Yahoo! and disposing of its Asian assets and non-search business for a combined $11.7bn, making $3bn of cost savings and receiving $2.8bn of tax benefits.

Microsoft would pay $22 per share for Yahoo!, valuing it at $30.5bn, which is a 74% premium to its $12.65 closing price last night on the Nasdaq exchange.

Yahoo! shares are down 37% since the end of July, when Microsoft last made an offer for its search business.

Yahoo! rebuffed the offer and pursued a search advertising partnership with Google, which is being delayed by investigations by regulators. It has also been in talks with Time Waner about a deal involving its AOL business.

Mark Nelson, a partner at Mithras, said: "It is imperative for Microsoft to act now, while the Yahoo!-Google deal is mired in regulatory concerns, and before Yahoo strikes a deal with AOL.

"It is imperative for the Yahoo! board to embrace this proposal as the best outcome for long-suffering Yahoo! shareholders."