Yahoo urged to make Microsoft search deal
Ratcheting up the pressure on Yahoo Inc., a major investor on Wednesday urged the Internet company to sell its Web search business to Microsoft Corp. and proposed a price: $15 billion.
Ivory Investment Management, a Los Angeles firm that owns 1.5% of Yahoo’s shares, said the Internet company and Microsoft needed each other to stand any chance of competing with Google Inc. in Web search.
Because combining their search businesses would reduce operating costs and increase their profitability, Microsoft could pay more than $15 billion upfront for Yahoo’s search business and still make out well, Curtis Macnguyen, Ivory Investment’s managing director, asserted in a letter to Yahoo’s board.
He said the cash infusion and resulting improved efficiency -- plus a Yahoo tender offer that would reduce the number of shares outstanding -- could boost the value of the Sunnyvale, Calif., company’s shares to $29, just below what Microsoft originally offered to acquire all of Yahoo.
Neither firm commented Wednesday, but their chief executives have said a search deal could be beneficial.
Analyst Gene Munster of Piper Jaffray, in a research report Wednesday morning, said Ivory Investment’s analysis of the operating implications of combining the two search businesses appeared to be sound, but he called the idea of a $15-billion upfront payment from Microsoft “unrealistic.”
Still, Yahoo’s shares, of which Ivory Investment owns 1.5%, jumped 10% to $13.40.
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