Investment group teeing up Yahoo deal, seeks Microsoft backing

By Dawn Kawamoto

A group of investors are reportedly putting together a buyout deal for Yahoo, which would call for Microsoft's financial backing, according to a report in TechCrunch.

Such an arrangement would call for the investment group to pay a premium of approximately 20 percent to Yahoo's current share price, which closed Tuesday at US$13 a share, for the entire company.

The investment group would take Yahoo, which would have a US$20 billion market cap under those terms, and simultaneously sell its search and marketing business to Microsoft under its previous terms presented in June, according to the report.

The software giant would not only buy these businesses from the investment group, but also provide much of the upfront financing the investors group would need to make the initial purchase. Microsoft would treat the funding as a loan to the investment group, which in turn would provide a fixed payment based on Yahoo's future cash flow, according to TechCrunch.

The report notes, however, that Microsoft has yet to agree to such a proposal.

This article was first published as a blog post on CNET