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Yahoo! Microsoft! merger! back! on! after! NDA! signed!

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A merger between Microsoft and Yahoo! could be back on the cards, after Redmond reportedly signed a non-disclosure agreement as a prelude to serious talks about their future together.

A source close to the deal told the New York Times that Microsoft had signed the pledge, including provisions not to discuss terms with third parties, as part of negotiations to see if it could buy some, or all, of the fading internet legend. Redmond has been holding talks with potential partners before signing the NDA, but now seems ready to make its move.

Yahoo! has been openly touting itself on the market ever since the rather inept firing of Carol Bartz, and the naming of several suitors, including the Alibaba Group, private investment funds like Silver Lake, KKR and TPG Capital, or even Google.

Microsoft’s name has also been mentioned, but there’s history. Three years ago the company offered Yahoo $33 a share for the business, valuing the company at $47.5bn, an offer co-founder Jerry Yang turned down. Yahoo!’s current share price is less than half that and investors are calling for his scalp.

According to the NYT sources, Microsoft is now prepared to kick in a billion dollars or so to a consortium of private investment vehicles led by Silver Lake and the Canadian Pension Plan Investment Board.

In return, Microsoft would get to keep its deal with Yahoo! to use Bing. Traffic from Yahoo! is key to Bing being viable. Based on a recent survey of the US search market each also-ran site controls about 15 per cent apiece, compared to 65.6 per cent by Google. The possibility of a Skype hookup is also mentioned.

“Microsoft does not comment on rumors and speculation,” Microsoft told The Register. Yahoo! also told us "We don't comment on rumor or speculation." Make of that what you will.

The stock market reacted to the news by pushing up Yahoo!'s share price slightly higher. ®

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