(By Mayur Pahilajani - iStockAnalyst Writer)
New York, NY - Leading investor and a venture capitalist in Yahoo! Inc (NASDAQ GS: YHOO) is pushing the Internet search pioneer to sell itself to Microsoft Corp. (NASDAQ GS: MSFT) under a new deal.
Mithras Capital Partners, which owns around 1.9 million Yahoo shares, or 0.14 per cent of the company's stock, have proposed that Microsoft to purchase Yahoo!'s search business at a price of $10.3 billion, or $2 billion less than its previous offer in the month of July 2008.
Mithras said it had planned to send separate letters to both the companies to return to the table with the new deal, which will allow Microsoft to dispose Yahoo!'s Asian assets and non-search businesses at a price of $11.7 billion. It will provide the company with $3 billion worth of cost savings and receive $2.8 billion of tax benefits, .
Yahoo! stock has consistently lost its value since the start of global financial turmoil last year. Under the current suggested deal, Microsoft would have to pay $22 a share, a 74 percent premium to Yahoo!'s stock rate at present.
Microsoft had abandoned the talks with Yahoo in July after the later company refused to accept Microsoft’s offer of $9 billion for its search business and to establish a revenue sharing partnership. In May, Yahoo! also rejected Microsoft's takeover proposal of $47.5 billion.
"It is imperative for Microsoft to act now, while the Yahoo-Google deal is mired in regulatory concerns, and before Yahoo strikes a deal with AOL," Mark Nelson, a partner at Mithras, said in a statement.
"It is imperative for the Yahoo board to embrace this proposal as the best outcome for long-suffering Yahoo shareholders," Nelson added.
Yahoo! has been in news with Google Inc (NASDAQ GS: GOOG) recently as they both try to smoothen things between them. Google launched a "facts site" carrying 17 slides explaining the significance of the four-year term deal.
The deal would also allow two optional three-year renewals, which is expected to boost Yahoo's revenue by $800 million in the first 12 months of the deal.
Early this month, Yahoo! confirmed that it will delay its controversial the Web search leader. Yahoo! indicated that it will postpone the partnership until U.S. regulators finish the antitrust review on whether the deal will hurt competition.
Shares of Yahoo! have tumbled down by as much as 36 percent since the beginning of August. The stock had tumbled on Wednesday to its five-year low to $13.20 and closed down by 5.6 percent at $13.76.
On Friday, the firm was moving down by 10 cents or 0.79 percent at $12.55 in late morning trading session on overall negative sentiment in the markets on Wall Street. Shares of Microsoft were trading down by $1.15 or 5.16 percent at $21.15 and Google was down by $2.23 or 0.68 percent at $326.75.
