Yahoo buddies up with Google in effort to boost value, thwart Microsoft

Yahoo will test Google's AdSense for Search service

Facing a hostile takeover by Microsoft, Yahoo Wednesday said it will begin a limited test of Google AdSense for Search service in a bid to maximize stockholder value.

The test of AdSense will deliver Google ads alongside Yahoo’s search results, according to a statement from the company.

The test is slated to last up to two weeks but will be limited to no more than 3% of Yahoo’s search queries on yahoo.com in the United States only.

Yahoo specifically said the test does not “necessarily mean that Yahoo will join the AdSense for Search program or that any further commercial relationship with Google will result.”

The move is a direct attack on Microsoft’s $44.6 billion bid to take over the company and its most recent threat of a hostile takeover.

In February, Yahoo rejected Microsoft’s takeover bid, which just this past weekend deteriorated into a back-and-forth letter writing campaign between Microsoft CEO Steve Ballmer and Yahoo CEO Jerry Yang.

Yahoo faces a three-week deadline issued by Ballmer in a letter to Yahoo on Saturday to agree to Microsoft’s offer or risk having the bid lowered and Microsoft launching a proxy battle to take over the company.

“This could potentially derail the Microsoft deal,'” Sanford C. Bernstein analyst Jerry Lindsay told the Bloomberg News Service. “It would be a way Yahoo could build its stock price back up.”

Microsoft reacted swiftly with a statement from Brad Smith, the company’s general counsel.

“Any definitive agreement between Yahoo! and Google would consolidate over 90% of the search advertising market in Google’s hands. This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo! We will assess closely all of our options. Our proposal remains the only alternative put forward that offers Yahoo! shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers.”

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