Microsoft offered $9 bln for Yahoo stake, search deal

By Daisuke Wakabayashi and Anupreeta Das

SEATTLE/SAN FRANCISCO (Reuters) - When Yahoo Inc turned down the latest offer from Microsoft Corp this week, it walked away from $9 billion in cash and $1 billion a year in revenue sharing, a source said on Friday.

Microsoft had offered $8 billion for a 16 percent stake in Yahoo and $1 billion for control of the Web company's search business, said the source, who is familiar with Microsoft's thinking.

The proposal also included revenue-sharing that would have delivered $1 billion a year in additional operating income to Yahoo, the person added.

Microsoft's most recent offer was an alternative to its previous full acquisition proposal.

Instead, Yahoo entered an advertising agreement with Google Inc on Thursday.

Microsoft, a dominant force in desktop software but a laggard in online search advertising, is still open to discussing its alternative proposal despite Yahoo's partnership with Google, the source said. Yahoo had no immediate comment.

Microsoft spokesman Jeff O'Mara declined to comment.

Microsoft's proposal called for it to take control of Yahoo's search business, guaranteeing the company better rates for advertisements tied to its search results than Yahoo's current Panama advertising system, the source said.