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ZDNet report Yahoo talking to Myspace owners News Corp

By Andrew Redfern @ 14th February 2008 12:52 pm

Yahoo is in talks on a possible deal with News Corp, but analysts have said an alternative was unlikely to emerge to rival Microsoft’s bid for Yahoo, now valued at $42.1bn (£21.4bn).

News of the talks to combine their web properties was first reported on the Silicon Alley Insider blog on Monday, which said one proposal would involve a cash infusion from Rupert Murdoch’s News Corp and an unnamed private-equity fund.

A source familiar with the situation said Yahoo and News Corp were talking about a deal but could not confirm any details.

The Wall Street Journal reported that a deal being discussed would give News Corp more than a 20 percent stake in Yahoo. It said the talks valued News Corp’s MySpace online social-networking site at between $6bn and $10bn.

“Any options other than Microsoft are all… fraught with serious consequences,” said Sanford C. Bernstein analyst Jeffrey Lindsay. “The management has left it to so late in the day to really find any alternative. They have basically backed themselves in the corner.”

Analysts say alternatives, such as a News Corp partnership, might have long-term strategic benefits for Yahoo, but would not give its shareholders an immediate investment return like Microsoft’s $31-a-share buyout offer.

Full ZDNet article here

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