Yahoo Now "Searching" For A Deal With News Corp?


Are they or aren't they? Only their investment bankers know for sure. Today began with blog rumors of a potential asset swapbetween Yahoo and Rupert Murdoch's News Corp., or even an outright competing bid to Microsoft's $44.6 billion hostile offer.

Now there's word from our partners at the Wall Street Journal, citing unnamed sources, that discussions are underway--matching the kinds of discussions that have been making the rounds for the better part of a year; that an asset swap between News Corp. and Yahoo is on the table.

The latest speculation has News Corp. swapping its MySpace property to Yahoo, along with some News Corp. cash and cash from an unnamed private equity firm, all for a 20 percent stake in Yahoo. The deal would hinge, however, on MySpace attracting a valuation of between $6 billion and $10 billion. A stretch, to say the least.

Such a plan would let Yahoo keep its independence and give News Corp. enormous control over some of the web's top properties, but it's not clear that Yahoo shareholders would go for such a deal. That's because it would likely torpedo all the gains Yahoo shares have enjoyed since the Microsoft bid was made public.

And unless there's been a significant change of heart from his company's recent earnings conference call, this is Rupert Murdoch's most recent public comments on the topic, courtesy of reader Matthew Alvarez who just sent them to me:

"We are definitely not going to make a bid for Yahoo! We're not really interested at this stage," Murdoch said.

Sources I have spoken to say you can't blame Yahoo for trying to shop around for a better deal. It's just that an asset swap is likely not what weary investors were hoping to see. If you had $45 billion sitting on the table, or an asset swap that might or might not work out eventually, which would you rather see happen. Message to Yahoo: Bird in the hand.

Questions? Comments?