In a company communiqué, Microsoft said that it had proposed an alternative deal to Yahoo, instead of a full acquisition. Analysts say that this move could save Yahoo from fighting a proxy battle with financier Carl Icahn. Microsoft emphasized it was not proposing to make a new bid to buy all of Yahoo, but did not clarify what that alternative might be
Yahoo said in a statement later on Sunday that it continued to consider a number of strategic alternatives and was open to pursuing any transaction which is in the best interest of our stockholders.
The company’s board would evaluate each of their alternatives, including any Microsoft proposal, consistent with its fiduciary duties, with a focus on maximizing stockholder value. It added that it had confirmed with Microsoft that it was not interested in pursuing an acquisition of all of Yahoo at this time.
Morningstar analyst Toan Tran definitely thinks that an alternative deal will be better than a full a acquisition. He says that it will be positive for both companies, because Microsoft will get the positive benefits of a Yahoo acquisition without the negative integration risks.
However, Kim Caughey, a senior analyst at Fort Pitt Capital Group, says that the market will probably send Yahoo shares higher while pushing down Microsoft shares when it opens on Monday. Caughey further says that a joint venture or minority shareholding with Yahoo may cause confusion about who is actually in charge.