Microsoft Is Said to Sign Non-Disclosure Agreement With Yahoo

By Brian Womack, Serena Saitto and Dina Bass - Nov 24, 2011 12:01 PM GMT+0700

Microsoft Corp. (MSFT), the largest software company, has signed an agreement that lets it take a closer look at Yahoo! Inc.’s financial information to help it consider financing a bid, a person briefed on the matter said.

Yahoo’s advisers asked that bids be submitted next week, said two other people, who asked not to be identified because the talks are private. Bidders are likely to offer to buy only a minority stake in Yahoo, as they haven’t arranged financing for a full takeover, the people said. Microsoft may help finance a bid and not try to buy Yahoo outright, two people said.

Private-equity firms TPG Capital and Silver Lake also signed non-disclosure agreements to help size up a possible bid for Sunnyvale, California-based Yahoo, people close to the companies have said. Microsoft would join other investors to safeguard its Web-search partnership with Yahoo and bridge any financing gap a buyout would require, people have said.

Frank Shaw, a spokesman for Redmond, Washington-based Microsoft, and Dana Lengkeek, a spokeswoman for Yahoo, declined to comment.

Yahoo has asked interested parties to sign the NDA to receive management presentations and more access to confidential financial information.

Yahoo, the largest U.S. Web portal, embarked on a strategic review of its options in September after firing Chief Executive Officer Carol Bartz. Under Bartz, the company struggled to stem sales declines or compete with Google Inc. (GOOG) and Facebook Inc.

Microsoft’s Yahoo Deal

Microsoft forged a 10-year agreement to provide search- technology to Yahoo sites under Bartz. The deal was aimed at helping both companies vie with Google, the leader in U.S. search-related advertising.

Yahoo shares were little changed yesterday at $14.94. Microsoft fell 1.3 percent to $24.47.

KKR & Co. and Blackstone Group LP (BX) are among the private- equity firms considering possible bids for Yahoo, people with knowledge of the matter said last month.

Alibaba Group Holding Ltd., China’s biggest e-commerce company, has said it’s interested in acquiring Yahoo, in part to buy back a stake owned by Yahoo. With a holding of about 40 percent, Yahoo is Alibaba’s biggest investor.

DealReporter previously reported that Microsoft signed the NDA.

To contact the reporters on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net; Serena Saitto in New York at ssaitto@bloomberg.net; Dina Bass in Seattle at dbass2@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net