Microsoft willing to assist bids for Yahoo

Yahoo is facing increasing pressure from shareholders and investors to sell its core business. It launched an auction of its core business last month and its CEO Marissa Mayer said the company will entertain offers as they come but its first priority
Yahoo is facing increasing pressure from shareholders and investors to sell its core business. It launched an auction of its core business last month and its CEO Marissa Mayer said the company will entertain offers as they come but its first priority is a turnaround plan.PHOTO: REUTERS

It is in talks with equity firms, a move seen as ensuring good ties with buyer, says news site

SAN FRANCISCO • Microsoft executives are in talks with equity firms considering bids for Yahoo, saying that Microsoft might be willing to offer "significant financing" for their efforts, tech news site Recode has reported.

However, Microsoft has not made commitments to investors so far, and any discussions are exploratory, Recode reported, citing unnamed sources. Microsoft's move is an attempt to ensure a good relationship with Yahoo's buyer, the website reported.

The news comes a day after the proxy war between Yahoo and activist investor Starboard Value got ugly, after the hedge fund made good on its threat to nominate nine directors to Yahoo's board replacing all current members.

"We have been extremely disappointed with Yahoo's dismal financial performance, poor management execution, egregious compensation and hiring practices, and general lack of accountability and oversight by the board," Starboard said in the letter.

"We believe the board clearly lacks the leadership, objectivity and perspective needed to make decisions that are in the best interests of shareholders."

The activist hedge fund, which has increased its Yahoo holdings to 1.7 per cent, is seeking the director sweep after first raising concerns about how the company was being managed in September 2014.

By increasing the pressure on Yahoo's board, Starboard believes it will bolster the chances that the one-time Web giant will finally sell its core businesses.

"It puts pressure on the board," said Mr Colin Gillis, an analyst at BGC Partners . "We have seen plenty of times when boards are less independent than they should be."

In a statement, Yahoo said it has "noted" Starboard's announcement regarding the board nominations, and its nominating and governance committee will review the nominees and respond "in due course".

Yahoo shares fell less than 1 per cent to US$34.77 at 3:01pm. They had gained 4.6 per cent this year through last Wednesday.

Yahoo is facing increasing pressure from shareholders and investors to sell its core business instead of going through a spin-off that would separate the company from its multibillion-dollar stakes in Yahoo Japan and Alibaba Group.

It launched an auction of its core business last month after it shelved plans to spin off its stake in Alibaba.

In an interview with Reuters last month, Yahoo chief executive officer Marissa Mayer said the company will entertain offers as they come but its first priority is a turnaround plan.

Microsoft's partnerships and acquisition strategy head Peggy Johnson is also part of the effort to finance a possible Yahoo buyer, Recode said.

Microsoft, which made a hostile bid to buy Yahoo in 2008, had no interest in making a more significant bid, but others do, Recode said.

Yahoo and Microsoft declined to comment.

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on March 26, 2016, with the headline 'Microsoft willing to assist bids for Yahoo'. Print Edition | Subscribe