News Corp woos Yahoo

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Rupert Murdoch is rumoured to be the latest suitor to flutter his eyelids in Yahoo’s direction as he seeks to muscle in on Microsoft’s hostile takeover bid.

Media reports claim that the chairman of News Corp has been getting up close and personal with Yahoo following the search giant’s rejection of Microsoft’s USD44.6 billion offer.

Rumours suggest that Murdoch is currently holding talks with Yahoo with a view to merging it with MySpace, the popular social networking site News Corp bought in July 2005 for USD580 million.

Rather than looking to acquire Yahoo, News Corp is believed to be interested in taking a 20 percent stake in the company, in a move which could allow Yahoo to ward off Microsoft’s advances.

The Redmond-based behemoth went public on 1 February with a cash and share offer valued at USD31 for each Yahoo share. This was 62 percent higher than Yahoo’s share price the day before the offer was announced.

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Nonetheless, Yahoo has dug its heels in and has said it is unlikely to consider any offer that values the company at less than USD40 per share.

On Monday, just a few hours after Yahoo rejected Microsoft’s offer, the spurned software giant made it clear that it wasn’t planning on accepting no as an answer. In a statement released on Monday evening, Microsoft called Yahoo’s rejection “unfortunate”.

“It is unfortunate that Yahoo has not embraced our full and fair proposal to combine our companies,” the statement said. “Based on conversations with stakeholders of both companies, we are confident that moving forward promptly to consummate a transaction is in the best interests of all parties.”

Microsoft’s bid for Yahoo is based on an attempt to give the firm a stronger hand in the online advertising market, which Google has dominated for some time. Combining the forces of the two brands would cause major problems for Google, which unsurprisingly reacted badly to news of the takeover plan.

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David Drummond, Google’s senior vice president for Corporate Development, posted a scathing entry on the search giant’s official blog shortly after the bid announcement in which he claimed Microsoft’s proposed takeover would be detrimental to the internet as a whole.

In addition, Eric Schmidt, chief executive of Google, reportedly called his Yahoo counterpart Jerry Yang to offer assistance in thwarting Microsoft’s bid.

Meanwhile, as if Yahoo weren’t busy enough dealing with unwanted advances from rivals, it’s rumoured the company is seeking a new partner itself in the shape of AOL. Reports earlier this week suggested that Yahoo is looking to restart merger talks with AOL as a way of defending itself against further bids. Just last week, Time Warner signaled that it was considering spinning off part of the ailing internet service provider and ad platform.

Whether Yahoo buys AOL, or Microsoft or another firm buys Yahoo remains to be seen but one thing’s for sure, there’s a lot of courtships going on right now and no one’s quite sure who’ll end up going home with whom.

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