Microsoft may sweeten offer; plans debt issue to finance Yahoo acquisition

05 February 2008

Mumbai: Microsoft Corporation, the world's largest software maker, is likely to go for a debt issue to finance the proposed $44.6 billion take-over of Yahoo! Inc, a top Microsoft official told an investors conference today.

Redmond, Washington-based Microsoft will sell bonds, for the first time, to finance part of the $31 a share cash-and-stock offer it has made for Yahoo, chief financial officer Chris Liddell told investors in New York.

Liddell said Microsoft wanted to sweeten the offer to make it attractive as it takes on Google Inc. in the internet advertising market. Microsoft had $21.1 billion in cash and short-term investments as of December 31.

Microsoft had a cash pile of at $60.6 billion in the fiscal year that ended June 30, 2004, before it announced an additional $3-a- share onetime dividend and a $30 billion four-year share repurchase plan.

By May 2006, and post buy-back, it had almost $35 billion in cash still on the books.

Microsoft then announced a $20 billion regular repurchase programme over five years combined with a onetime $20 billion tender offer for its shares. The tender offer was undersubscribed, so Microsoft boosted the regular buyback.