Mithras Capital, a private equity fund that owns 1.9 million shares, or 0.14 percent of Yahoo, propose a new deal to sell the company to Microsoft for $22-per-share, a 74 percent premium to Yahoo’s current stock price, according to The New York Times.
The proposal would have Microsoft unload Yahoo’s Asian assets and non-search businesses, extract $3 billion worth of cost savings and receive $2.8 billion of tax benefits. Microsoft would ultimately pay $10.3 billion for Yahoo’s search business.
Mithras Capital said in a statement that the proposal would allow Microsoft to buy Yahoo’s search business for $2 billion less than if had purchased Yahoo during the original offer in July.
Yahoo had initially rejected Microsoft’s $9 billion proposal to buy its search business and also rejected a $47.5 billion complete takeover offer from Microsoft in May.
Microsoft executives have said that the chances of it buying Yahoo are “negligible,” but that was before the decrease in price. Rob Sanderson, an analyst with American Technology Research, wrote in a note to clients on Wednesday that as Yahoo shares decline and Microsoft continues to struggle in its online services business, it is increasingly likely that Microsoft will make a new offer. He has a buy rating on Yahoo with a $22 target price.
The proposal calls for Yahoo’s board to drop its poison pill, which is preventing the tender offer. It values Yahoo’s Asian assets at 47.2 billion and its non-search business at $4.5 billion.
“It is imperative for the Yahoo board to embrace this proposal as the best outcome for long-suffering Yahoo shareholders,” Nelson said in a statement