Microsoft Proposes To Acquire Yahoo’s Search Advertising Business

Posted May 20, 2008

It has been about 5 days since Carl Icahn, major shareholder of Yahoo! and American billionaire and Roy Bostock, Chairman of Yahoo! sent letters to each other about who should be running the search engine company.  Icahn seems to have a high interest in having Yahoo! acquired by Microsoft or having a different Board of Directors run Yahoo! 

Yahoo! has looked at having alternatives to an acquisition such as advertising revenue sharing partnership with Google.  However, analysts fear that the partnership with Google will not generate enough revenue to keep Yahoo! afloat.  On May 3, Microsoft decided to walk away from the deal, but yesterday Microsoft found themselves pulled into making a different deal.

Microsoft’s proposal is to buy Yahoo!’s search advertising unit for an undisclosed price.  The proposal also mentions that Yahoo! would sell off it’s holding assets in Asia and Microsoft would acquire a minority stake in Yahoo!  These are similar deals that Microsoft struck with Digg and Facebook.

Sandeep Aggarwal, an Internet analyst at Collins Stewart LLC estimated that Yahoo!’s search advertising unit is valuated at $21 billion.  Yahoo!’s assets in Asia are valuated at roughly $10 billion. 

Yahoo! is mulling over the Google advertising sharing deal and the Microsoft acquisition deal.  When a response is made, Pulse 2.0 will have the news covered.