The shares of Microsoft and Yahoo rose in price in premarket trading Wednesday after The Wall Street Journal reported Microsoft has talked to other media companies about teaming up to buy Yahoo's search business.
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The paper reported Microsoft has spoken to News Corp., Time Warner Inc. and others about a way to complete the proposed deal, which was first announced on Feb. 1. Microsoft ultimately withdrew a $47.4 billion bid for Yahoo in May.
The Journal suggested that Microsoft would buy Yahoo's Internet search business, and the rest of the company would be combined with another outlet, like News Corp.'s MySpace or Time Warner's AOL.
The talks were described as preliminary, and citing sources familiar with the talks, the Journal indicated Microsoft may be having difficulty finding a partner.
In premarket trading, shares of Yahoo climbed $1.89, or 9.4 percent, to $22.09. The stock finished at $20.20 Monday, and is trading at its lowest levels since late January. Microsoft shares gained 17 cents to $27.04.
Calls to both Microsoft and Yahoo were not immediately returned.
Microsoft and Yahoo! pursued merger discussions in 2005, 2006, and 2007, that were all ultimately unsuccessful. At the time, analysts were skeptical about the wisdom of a business combination.
On February 1, 2008, after its friendly takeover offer was rebuffed by Yahoo!, Microsoft made an unsolicited takeover bid to buy Yahoo! for US$44.6 billion dollars in cash and stock. Days later, Yahoo! considered alternatives to the merger with Microsoft, including a merger with internet giant Google or a potential transaction with News Corp. However, on February 11, 2008, Yahoo! decided to reject Microsoft's offer as "substantially undervaluing" Yahoo!'s brand, audience, investments, and growth prospects. As of February 22, two Detroit based pension companies have sued Yahoo! and their board of directors for breaching their duty to shareholders by opposing Microsoft's takeover bid and pursuing "value destructive" third-party deals.
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