Yahoo, Microsoft Still Negotiating on Search Deal

Yahoo and Microsoft have agreed to extend the time required for them to sign off on the details of their deal regarding Bing search and revenue sharing, according to a filing with the Securities and Exchange Commission (SEC) Wednesday.

“On October 28, 2009, Yahoo! Inc. and Microsoft Corporation mutually agreed to extend the period to negotiate and execute a Search and Advertising Services and Sales Agreement and a License Agreement … reflecting and supplementing the provisions of such agreements as set forth in annexes to their binding letter agreement dated July 29, 2009,” Yahoo (NASDAQ: YHOO) officials said in a form 8-K filed with the SEC.

Microsoft (NASDAQ: MSFT) officials confirmed that the deal is taking longer than originally hoped, as the two parties work to wrap up the legal aspects of the agreement.

“Given the complex nature of this transaction, there remain some issues that need some additional clarity and definitive details,” Jack Evans, a Microsoft spokesperson, said in a joint statement from the two companies. “So Yahoo and Microsoft … have mutually agreed to extend the period to negotiate and execute the agreement. Both companies are optimistic that we will be able to close this deal by early 2010.”

Signing the agreement will not be the last hurdle for the deal, either. The agreement between the two companies still has to clear regulators in the U.S. and possibly abroad — particularly in the European Union.

Microsoft began pursuing Yahoo as a takeover target in February 2008, but the offer was spurned by then-CEO Jerry Yang. However, while Microsoft CEO Steve Ballmer finally backed away from the proposed merger, he and his minions continued to pursue other potential match-ups.

Finally, after an ad deal between Yahoo and Google was canceled due to stiff resistance from U.S. regulators, Yahoo’s new CEO, Carol Bartz, negotiated a new search-only arrangement with Microsoft during the summer.

Under the terms of the ten-year pact, Yahoo would use Microsoft’s Bing search engine on its sites in return for some of the advertising revenues from those sites.

The extension does not appear to be more than a minor hiccup for the deal, since at the time the preliminary deal was announced on July 29, executives said it could take up to two years before the deal was completely in place.

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