Microsoft Corporation (NASDAQ:MSFT) has signed a nondisclosure agreement with Yahoo! Inc. (NASDAQ:YHOO). The NDA means that Microsoft has lined themselves up as a potential bidder for the search engine and multimedia company.
Microsoft will be joining private equity companies TPG Capital and Silver Lake to look closely at Yahoo!’s financial and operations records. About a month ago, bidders did not like having an NDA form put in front of them which forbade them from talking to other interested parties.
However Microsoft held talks with several partners last month about a potential bid. Through the acquisition, Microsoft would put in billions of dollars in financing as part of a consortium led by Silver Lake and the Canadian Pension Plan Investment Board.
Microsoft interest in the acquisition is largely due to preserving their lucrative partnership with Yahoo! Currently Yahoo!’s sale force sells ads against the results for the Microsoft Bing search engine. Microsoft would even consider pushing their acquisition of Skype into Yahoo!
Previously TPG was only considering a small investment in Yahoo! rather than buying the entire company. There are several other companies interested in an acquisition that have not yet signed an NDA including the Alibaba Group. Yahoo! currently owns 40% in Alibaba.