Yahoo Headquarters

Reports indicate that Microsoft Corporation (NASDAQ:MSFT)’s executives have had meetings with some private equity firms which are thinking of buying Yahoo! Inc. (NASDAQ:YHOO), telling them that they might be able to help financially if need be.

Yahoo! has already said it is for sale. The question is, are they actually ready for sale because the level at which they have been going with the process has been very slow. Some analysts claim that this might be due to current CEO, Marissa Mayer’s dislike for the sale. The CEO wants to use her tactics to turn around the company’s fortunes. The CEO has been under intense pressure after her initial 3year plan she implemented three years back did not bring as much hope and business as they had hoped.

An activist shareholder in the company, Starboard Value, mounted a challenge to Yahoo by naming their board of directors which they want to replace the current ones. Jeff Smith, Starboard’s CEO, said “credibility to a process that has been publicly criticized and repeatedly for being too slow, fraught with conflicts of interest and very difficult for highly qualified and motivated strategic and financial buyers to access much-needed diligence information.”

Many of the possible buyers said they believed the Yahoo sale effort to be nothing but a farce. This is something the board denies but mostly no one listens and believes in the current Yahoo board. The current Yahoo board has been under so much scrutiny and criticism that what they say does not carry any credibility anymore, so people have to take what they say with a pinch of salt.

Microsoft’s involvement in the issue might come and bring credibility and seriousness to the issue. Peggy Johnson, Microsoft’s partnerships and acquisition strategy head, is believed to be part of the team that is leading the effort together others at Microsoft.

However Microsoft has not made a commitment to any investor and discussions at this point are just that, discussions. Microsoft’s involvement ensures on their part that whoever is the next owner at Yahoo will be someone credible and a good partner going forward. This can be traced back to Yahoo’s and Microsoft’s close search and partnership ties, which is a long time partnership.

The deal with Yahoo was done back in 2008, when Microsoft’s CEO at the time, Steve Ballmer, put in a hostile at $31 a share valuing the company $45 billion back then.