Microsoft is in talks with private equity companies about helping them to acquire the core businesses of troubled internet company Yahoo, according to reports.
A source familiar with the situation told Reuters that Microsoft executives have held meetings with potential Yahoo investors about the purchase, which Microsoft would help underwrite.
The two companies have a long-standing relationship in search and advertising. The source suggested that Microsoft is keen to preserve this connection with Yahoo, hence its interest in being involved in a buy-out of Yahoo's core internet business, which includes search, email and news.
Re/code reported that Microsoft has been in talks with a number of private equity firms and is considering providing "significant" financing in a bid for Yahoo.
Yahoo has a market capitalisation of about $33bn, but this is largely down to the value of its stakes in Chinese e-commerce firm Alibaba and Yahoo Japan. The core business is valued at just $6bn to $8bn because the firm has struggled to compete for online and mobile advertising against the likes of Google and Facebook.
The efforts of Yahoo CEO Marissa Mayer, recruited from Google, have proved ineffective in turning the company around in the four years she has been at the helm. This has led to activist hedge fund Starboard Value LP trying last week to overthrow the entire Yahoo board, including Mayer.
This isn't the first time that Microsoft has been interested in acquiring Yahoo. Former CEO Steve Ballmer tried unsuccessfully in 2008 to buy Yahoo for about $45bn. Microsoft could now buy the company for a much smaller figure. Re/code suggested that Yahoo's board would accept $10bn for the core internet business.
Re/code's sources said that Microsoft has no interest in making a more significant bid, but that others, including AT&T, Verizon and Comcast, have also been in acquisition talks with Yahoo.
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