Mousetrap weblog: Does Microsoft really want Facebook?

Microsoft is believed to have approached Mark Zuckerberg, the founder of Facebook, over a possible acquisition of the social networking site.

It is believed that Microsoft has sought to gauge Facebook’s level of interest about a potential bid after $47.5 billion (£24.3 billion) takeover talks with Yahoo!, the online search engine, failed on Saturday. It is not thought that there are any active talks between Microsoft and Facebook.

In October, Microsoft took a $240 million stake in Facebook, which valued the site at about $15 billion. Although Mr Zuckerberg has resisted selling the entire company, indicating instead that he would prefer to float the group, it is not known what his response to Microsoft has been.

Facebook users give thumbs down to Microsoft

Any bid to take over the social networking site would attract the wrath of Facebook's staunchly anti-Microsoft community

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In March, Li Ka-shing, one of Asia’s most successful investors, doubled his stake in Facebook, underlining the site’s implied value of $15 billion. The site is regarded as a prize asset because of the loyalty of its 70 million users.

The Hong Kong billionaire’s investment was made through the Li Ka-shing Foundation, which spent $60 million to increase his stake to 0.8 per cent of the company. That matches the $60 million that he invested last year and is valued on the same terms as the $240 million stake that Microsoft took in October.

In previous rounds dating to 2004, Facebook has taken about $40.7 million from venture capital investors, including Peter Thiel, the PayPal co-founder and former chief executive, Accel Partners, Greylock Partners and Meritech Capital Partners. Facebook competes with the larger MySpace, which has 100 million users. It is thought that Mr Zuckerberg intends to prepare his company for flotation.

Rupert Murdoch, the chairman and chief executive of News Corporation, parent company of The Times and owner of MySpace, has, in the past, ruled out buying Facebook, saying that it was overvalued. News Corp bought MySpace for $580 million in 2005.

Microsoft is looking for an alternative acquisition after Steve Ballmer, its chief executive, walked away from Yahoo! on Saturday.

Shares in Microsoft closed at $29.63, down nearly 7 cents, in New York last night. Microsoft and Facebook did not immediately return calls.

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