• TechCrunch/D: All Things Digital , Thursday, January 8, 2009 11:15 AM

TechCrunch writer Michael Arrington caused quite a stir in the blogosphere yesterday with this report that an investment group was planning a coup to takeover Yahoo with debt supplied by Microsoft, a rival and one-time prospective buyer of the Web giant. Under that deal, the group, comprised of Silicon Valley execs and investment bankers, would make a takeover bid for Yahoo at a (low) premium of 20% the company's current price of around $20 billion, or $13 per share. Arrington said "a complicated financial structure" would finance the deal, but Microsoft, with a $23 billion cash hoard, would supply the bulk of the cash. Also, as part of the transaction, Yahoo's search and search advertising business would be sold to the software giant under similar terms to a proposal made by the company earlier this year.

Hogwash, says Kara Swisher, who chides the report for naming no names or sources. "The alleged deal being cooked up by a group of Silicon Valley investors to take a run at Yahoo using money raised from Microsoft, is little more than what we used to call a 'trial balloon' when I worked at The Washington Post." Her sources at Microsoft "scoff at the notion that they would help others buy Yahoo, in order to get at its search business," she said.

Said the source: "We can deal directly with Yahoo, which is moving through a process to get a new CEO, and when the time is right, we will deal with their leadership. Getting involved in some convoluted deal with others in control...it's idiotic."

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