Yahoo Inc. said Thursday it is no longer talking to Microsoft Corp. about a merger because the Redmond, Wash.-based software giant was only interested in purchasing part of the company.
But the Wall Street Journal reported Yahoo is nearing an agreement with Google involving its search advertising business.
For its part, Yahoo made no mention of such a deal in a statement it issued late Thursday afternoon. Such deals are typically announced either before U.S. financial markets open in the morning or after they close at 4 p.m. Eastern time.
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On Feb. 1 Microsoft offered to purchase all shares of Yahoo but Yahoo rejected this bid, valued at US$44.6 billion at the time, as too low. This set about several weeks of negotiations between the companies. After Microsoft ended its acquisition bid for Yahoo on May 3, the companies acknowledged that they were in talks for an unspecified deal that most observers assumed involved Yahoo's search-advertising business.
Microsoft on Thursday confirmed that it was not interested in rebidding for all of Yahoo, but had been seeking an "alternative transaction" that it believed would bring Yahoo shareholders more than US$33 per share, which the value of Microsoft's previous final bid for all of Yahoo.
With respect to this, Yahoo's board decided "that such a transaction would not be consistent with the company's view of the converging search and display marketplaces, would leave the company without an independent search business that it views as critical to its strategic future and would not be in the best interests of Yahoo stockholders," the company said in a statement.
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In April, Yahoo announced that it would test running Google ads along with its search results. Afterward, the companies said the test had gone well, but declined to provide more details on whether they would seek a longer-term, more formal, search ad deal.
Microsoft and Yahoo failed to come to terms on either a full or partial acquisition after months of on-again, off-again negotiations. Yahoo now faces the possibility of its board members being voted out by shareholders in a proxy battle spurred by billionaire investor Carl Icahn.