Microsoft resumes talks with Yahoo

— 4:28 PM on May 19, 2008

Like a hopeful spouse after a row, Microsoft is trying to make things work again with Yahoo. After abruptly ending merger talks a couple of weeks back, BBC News says Microsoft has begun talking with Yahoo about an "alternative transaction":

In a statement, Microsoft said it "is not proposing to make a new bid to acquire all of Yahoo at this time, but reserves the right to reconsider that alternative".

It issued the statement, it said, "in light of developments" since the company withdrew its bid two weeks ago.

Microsoft stressed that a deal may or may not follow from Sunday's statement.

BBC News says Yahoo later confirmed it was "looking at a number of 'value maximising' alternatives with Microsoft," although neither firm elaborated on exactly what those alternatives might be. Still, the rumor mill suggests Microsoft could buy Yahoo's search business and grab a minority stake in the company.

Yahoo's current directors are under significant pressure to come to some sort of deal. Amidst stark criticism over Yahoo CEO Jerry Yang's decision to turn down Microsoft's $33-a-share buyout offer, billionaire Carl Icahn has bought up 59 million Yahoo shares and is threatening to get Yahoo's current board members fired at the annual meeting in early July.

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