Microsoft considers backing bids for Yahoo buyout

Microsoft executives have been meeting with private equity firms to potentially offer financial help in buying Yahoo, according to sources cited by ReCode. Yahoo, of course, is in serious trouble, and although CEO Marissa Mayer continues to battle to turn the once-dominant internet portal around, with the Board of Directors actively “exploring additional strategic alternatives” to a turnaround plan, meaning putting the company up for sale.

For Microsoft, this would obviously pose some serious problems, as its deal with the company it once tried to buy to provide search engine results on Yahoo properties could potentially be in jeopardy with new buyers.

While no definitive commitments have been made, Microsoft is interested in ensuring that whoever does buy the company if it is indeed sold is a “good partner”, meaning that they’ll continue to honor the 2009 10 year search deal. Assisting in a deal could help Microsoft while costing them “almost nothing”, accoding to ReCode:

Preserving its current status is important to Microsoft, said sources, which is why it has been mulling the financing of possible Yahoo buyers, who will have to come up with billions of dollars in cash to be competitive. “If Microsoft put in a billion, it would cost them almost nothing,” said one investor who had spoken to the company. “It’s a minor thing and it buys them a lot.”

Microsoft is of course interested in prolonging the Yahoo-Bing search deal as long as possible, it’s helped to build up search share for Bing, although it hasn’t been particularly lucrative for either Yahoo or Microsoft.

According to the post, Microsoft has no interest in another try at buying Yahoo, but others, including AT&T, Verizon, and Comcast, and investment firms including Vista Equity Partners, TPG and KKR are all interested.

Microsoft could either see quite a boost by a Yahoo sale, or could even be kicked to the curb if new investors aren’t interested in the search deal, so it’s an important time for both companies. We’ll keep you posted as this all develops.