Report: Microsoft and Yahoo deny search deal

Jordan Golson — Sun, 30 Nov 2008 08:26:19 -0800

The Times of London reported this morning that Microsoft and Yahoo are in talks to give Microsoft control of Yahoo's search business for 10 years in a complicated transaction that would put ex-CEO of AOL Jonathan Miller and Ross Levinsohn, former president of Fox Interactive Media, in charge of the company. But Levinsohn is denying it.

The Times claims that Microsoft would provide a $5 billion facility to the new management team, who would then raise an additional $5 billion from outside investors. That cash would be used to buy "convertible preference shares and warrants which would give it a holding in excess of 30%" of the company.

On top of that, those external investors would appoint 3 of the 11 Yahoo directors, and give Microsoft a two-year call option to buy Yahoo's search business for $20 billion.

Well, that's pretty convoluted -- and, it seems, total nonsense. Kara Swisher at All Things Digital spoke to Ross Levinsohn, who said it was "total fiction." Additionally, she spoke to "top sources" at Microsoft and Yahoo who denied the deal was taking place.

Even if the Times report were true, it sounds awfully complicated. Better for Microsoft to just do a straight deal on search with guaranteed payments with the new CEO. Whoever that might be.

(AP Photo/Paul Sakuma)