Internet search titan Google Inc is in discussions with private equity players to finance a possible deal to buyout Yahoo Inc, says a media report.

“Google Inc has talked to at least two private equity firms about potentially helping them finance a deal to buy Yahoo Inc’s core business, ” The Wall Street Journal said in a report citing a source.

The report said that Google, which has $43 billion in cash and short-term investments, and prospective partners have held early-stage discussions but have not put together a formal proposal and the internet search giant may end up not pursuing a bid. However, it is not clear which private equity firms Google has talked to.

The daily said that Yahoo declined to comment.

Any deal tying two of the biggest internet companies would be sure to attract antitrust scrutiny.

Earlier the report said that software major Microsoft Corp is also considering financing part of a bid for Yahoo by a private equity firm.

According to the publication, Google’s interest in participating in the Yahoo sale discussions could also be partly an attempt to bid up prices to make matters more difficult for competitors such as Microsoft.

Yahoo is believed to be looking for strategic options after firing former Chief Executive Officer Carol Bartz for her failure to increase the internet firm’s market share in the online advertising market. Still, it has been attracting a lot of attention from possible suitors.

Chinese internet company Alibaba Group’s head Jack Ma was also recently reported to have said that he was “interested” in buying Yahoo. Besides, a number of potential private equity firms, including Silver Lake have expressed interest in a deal with Yahoo.

Further, an internal memo sent by Yahoo Chairman Roy Bostock and co—founders David Filo and Jerry Yang last month to their employees had sparked rumours about a possible sale of the internet company.

In the memo, the top executives said that a “strategic review” process was on to bring the company back to robust growth path and multiple parties have “expressed interest in a number of potential options“.

(This article was published on October 23, 2011)
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