Microsoft, which is reportedly interested in a joint Yahoo purchase with other parties, would likely put together a deal involving a mix of preferred stock and bonds in order to finance its part in any purchase, The Wall Street Journal reported today.
Under one scenario reportedly being discussed, Microsoft would put up several billion dollars in funding, along with additional financing by banks, with private equity firm Silver Lake Partners and one of its investors, Canada Pension Plan Investment Board, putting in the rest, according to an earlier WSJ story this week.
Microsoft appears to be trying to limit its risk in any possible deal. “Owning a chunk of preferred stock in Yahoo would allow Microsoft to recoup its investment before owners of common stock and some other types of investors. Similarly, lending to the new owners at a high interest rate would help Microsoft make a return on its investment even if upside on the deal proved limited,” the WSJ reported.
Microsoft bid unsuccessfully for Yahoo in 2008. But the two companies formed a partnership afterward in which Bing powers Yahoo’s searches and Yahoo sells premium ads for both.