From left, Ted S. Warren/Associated Press; Scott Eells/Bloomberg News; Fred Prouser/Reuters; Asa Mathat/Agence France-Presse — Getty ImagesPotential bidders for Yahoo include, from left, Steve Ballmer of Microsoft, Glenn Hutchins of Silver Lake, David Bonderman of TPG Capital and Jack Ma of Alibaba.
12:53 p.m. | Updated
Microsoft has signed a nondisclosure agreement with Yahoo, according to a person briefed on the matter, formally lining itself up as another potential bidder for the struggling Internet company.
By signing the agreement, Microsoft will join the private equity firms Silver Lake, TPG Capital and others in being allowed to take a closer look at Yahoo’s books.
A month ago, many potential bidders for Yahoo had balked at signing the nondisclosure agreement, citing a “no crosstalk” provision that forbade them from talking to other interested parties.
But Microsoft had held talks with potential partners last month about a possible bid, people briefed on the matter said previously. Under one such combination, Microsoft would chip in billions of dollars in financing as part of a consortium led by Silver Lake and the Canadian Pension Plan Investment Board. That group would be backstopped by billions of dollars in bank financing as well.
Microsoft’s primary interest in Yahoo appears to be in preserving the company’s lucrative partnership with the Web pioneer. Microsoft’s Bing search engine fetches answers to user queries, while Yahoo’s sales force sells ads against those results.
The company may also push to integrate its newest acquisition, the Internet communications provider Skype, into Yahoo.
Others who have signed the nondisclosure agreement, like TPG, had been considering making only a minority investment in Yahoo rather than buying the company outright. Such a move would involve Yahoo borrowing money to finance a stock buyback, giving that investor effective control of the company.
Some other firms have not yet signed the nondisclosure agreement. The Alibaba Group, in which Yahoo owns a 40 percent stake, has been in talks with potential partners about mounting its own bid for Yahoo, people briefed on the talks said previously.
Representatives for Microsoft and Yahoo declined to comment or were not immediately available. News of Microsoft’s signing a nondisclosure agreement was reported earlier by DealReporter.
Yahoo shares were up more than 1 percent, at $15.09, in early morning trading on Wednesday. That gives the company a market value of $18.7 billion.
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