Microsoft is in talks to acquire Yahoo! Search for USD20bn, in a deal that could see the software giant bringing in a new management team at Yahoo!, according to a Sunday Times report.
Microsoft and Yahoo! are reportedly in agreement over the "broad terms of the deal", which is expected to see former AOL CEO Jonathan Miller and former Fox Interactive Media president Ross Levinsohn lead a new management team.
However, a separate report on the Wall Street Journal's All Things Digital Blog dismisses the news citing top sources at Yahoo! and Microsoft who claim neither company has been in negotiations of late. Meanwhile, Levinsohn reportedly branded the report "total fiction".
The Sunday Times report, which does not cite sources, says Microsoft will sign a 10-year agreement to operate Yahoo!'s search business, with the option to buy the business after two years. The deal is expected to boost Yahoo!'s income by USD2bn per year.
Representatives from Microsoft and Yahoo! declined to comment on the rumours.
Speculation surrounding a Microsoft-Yahoo! deal re-emerged last month after Google pulled out of its planned ad deal with Yahoo!, due to regulatory restrictions. Speaking earlier this month, Microsoft's CEO Steve Ballmer quashed suggestions that Microsoft would re-bid for Yahoo!, but said it was "very open" to a search ad deal.
The current news comes just days after billionaire investor Carl Icahn boosted Yahoo!'s share price by acquiring an additional USD67.2m worth of shares in the struggling internet giant. The move saw his holding rise from roughly 5% to 5.5%.
Icahn first bought into Yahoo! in May, following Yahoo!'s rejection of Microsoft's USD44.7bn takeover offer. Icahn claimed that merger talks were "completely botched" and threatened to oust Yahoo!'s board as part of a proxy fight before accepting a position on the board in settlement.
Yahoo! founder and CEO Jerry Yang announced last month that he will step down when a replacement can be found, following months of shareholder pressure.
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