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Last updated on April 24, 2014 at 13:57 EDT

Executive Denies Microsoft-Yahoo Acquisition Talks

December 1, 2008

A key Microsoft executive said that a recent Sunday Times report suggesting the company had reentered talks with Yahoo to buy the U.S. internet company’s online search business for $20 billion was “total fiction.”

The Times story falsely reported that Microsoft’s new proposal would involve a complex transaction that would see the U.S. software giant support a new management team to take control of Yahoo.

The article claimed the new team would be led by ex-AOL Chairman and CEO Jonathan Miller and former Fox Interactive Media President Ross Levinsohn.

However, top sources at Yahoo and Microsoft scoffed at the report and the influential blog “AllThingsDigital,” affiliated with the Wall Street Journal, quoted Levinsohn as saying the report was “total fiction.”

“We don’t comment on rumors, and all this is a rumor,” said Yahoo spokesman Brad Williams.

A spokeswoman for Microsoft had no comment.

In May, Yahoo Chief Executive Jerry Yang and his board rejected Microsoft’s $47.5 billion buyout offer for Yahoo, claiming the bid was too low. Microsoft subsequently withdrew the offer and ended any further negotiations.

But earlier this month when Yang announced he was stepping down, Microsoft CEO Steve Ballmer ruled a bid out at the time, but said he was “open” to talks on a deal for Yahoo’s search business.

In a recent interview in Barron’s, Yahoo board member and activist investor Carl Icahn, who increased his stake in the company to 5.4 percent last week, announced he still favored the sale of the search business.

“Microsoft has said publicly that they are not interested in buying the whole company, and I believe them. But they are interested in doing a deal on search, and we should pursue that,” Icahn said.

In an effort earlier this year to push the company to accept Microsoft’s offer, Icahn threatened to launch a proxy fight against Yahoo and oust Yang. He later struck a deal with Yahoo and joined its board.

Icahn started amassing Yahoo shares during the company’s merger talks with Microsoft.

Senior directors at Microsoft and Yahoo are understood to have agreed on the broad terms of the deal, but there is no guarantee it will succeed, The Sunday Times article suggested.

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