Shares of search engine Yahoo Inc. (YHOO) rose 7% on Tuesday's regular trading after the Wall Street Journal reported that Jonathan Miller, former Chairman and chief executive of AOL, a unit of Time Warner Inc. (TWX), is talking to investors about raising money to buy all or a part of Yahoo.
According to the report, Miller, who headed AOL from 2002 to 2006, has been in talks for months with private-equity investors and sovereign-wealth funds, and the move accentuates the investor interest in the troubled Internet giant.
Citing people familiar with the matter, WSJ noted that Miller is mulling a deal that would be worth about $20 to $22 a share and which would require $28 billion to $30 billion in funding to buy the entire company.
The stance of software giant Microsoft Corp. (MSFT), which reportedly indicated it is still open to doing a search deal with Yahoo, on such a deal is not clear. Also, other investors and private-equity firms continue to mull potential moves for Yahoo, said people familiar with the talks.
Miller, a partner at investment firm Velocity Interactive Group, has been involved in the previous takeover talks between Yahoo and Microsoft for months, advising both sides on how to make a deal between the two companies.
Some major Yahoo shareholders and board members reportedly said Tuesday that they were not aware of Miller's latest talks, and suggested that his talks are informal. Meanwhile, some others were positive that he would succeed in lining up investors.
The prevailing economic downturn has forced banks reluctant to lend money, and financing a deal of this size would be extremely difficult, the report suggested, adding that at the current time of slump in advertising, an investment in Yahoo, which is on the look out for a chief executive, would be extremely risky.
Yahoo has been struggling for long, with the latest setback being the pulling out of a proposed advertising deal by rival Google Inc.(GOOG).
Just last week, conflicting reports were swirling over a potential deal involving Microsoft and Yahoo. A London Times report said Microsoft is negotiating a deal to buy the search business of Yahoo, and Microsoft intends to support a new management team led by Miller and former Fox Interactive Media President Ross Levinsohn to take control of the search business. However, a blog post by the Wall Street Journal's All Things Digital, owned by News Corp. (NWS), has termed the report 'total fiction'.
YHOO closed Tuesday's regular trading session at $11.50, up $0.76 or 7.08%, on a volume of 46 million shares.
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