Murdoch in talks for Yahoo
The Internet company is weighing a merger with News Corp. after rejecting Microsoft's unsolicited $45-billion offer as too low.
SAN FRANCISCO — A week after saying he wouldn't get into a bidding war for Yahoo Inc., Rupert Murdoch is emerging as a potential white knight for the Internet company as it tries to fend off Microsoft Corp.'s unsolicited takeover bid, according to people familiar with the talks.
Murdoch's News Corp. is working on an offer to merge its Internet business, which includes social-networking site MySpace, with Yahoo in exchange for a major stake in the company, according to people who have been briefed on the discussions.
Yahoo's board is meeting today to discuss News Corp. and other options, a person close to Yahoo management said. Yahoo has rejected Microsoft's $44.6-billion offer as being too low, and Microsoft has signaled it would consider taking the bid directly to shareholders through a proxy fight. Analysts expect Microsoft to raise its half-cash, half-stock offer of $31 a share.
The talks with News Corp. began shortly after the takeover bid was announced on Feb. 1. Under the plan being discussed, Yahoo Chief Executive Jerry Yang and President Sue Decker would run the combined company, which would include Yahoo, MySpace and other Web properties owned by News Corp.'s Fox Interactive Media, a person familiar with the discussions said.
Yahoo also would receive a cash infusion from a private equity fund, whose identity could not be confirmed today. One source said Providence Capital, which invested in News Corp. and NBC Universal's online video joint venture, Hulu, was a likely candidate.
Yahoo and News Corp. declined to comment. Providence Capital could not be immediately reached.
"The Yahoo board is carefully evaluating all of the company's strategic alternatives and will pursue the best course of action to maximize long-term value for stockholders," Yahoo spokeswoman Tracy Schmaler said.
In the days following the Microsoft bid, News Corp. said it was not interested in competing with Microsoft to buy Yahoo. Now Yahoo and News Corp. are trying to rush a deal to the table with the help of the unnamed private equity fund. The talks were first reported this week by blogs, including Silicon Valley Insider and TechCrunch.
"I wouldn't doubt they are having discussions, but I am not sure it amounts to an alternative that's as attractive to Yahoo shareholders as even the existing Microsoft bid, and certainly not a sweetened bid," Stanford Group analyst Clayton Moran said.
