Yahoo Negotiating with Tumblr for possible Acquisition

The acquisition of Tumblr is becoming a sweepstakes. Multiple reports say the social blogging site is amidst serious talks with Internet giant Yahoo, which wants to make a strategic acquisition, partnership or investment.

If the outright acquisition was to take place, it could exceed $1 billion, which would be a premium of 25% over the last funding valuation Tumblr was given.

The price could even go higher if the talks that are currently just between the two turn into a two or three-way bidding war.

Sources say that Tumblr has had similar yet not as detailed talks with both Microsoft and Facebook.

Even though the conversations with both Microsoft and Facebook have been real, they do not mean anything if Yahoo were to decide to make an official offer. This is because it currently is negotiating in what is called a lockup.

Back in December, David Karp, the CEO and founder of Tumbler said he did not want to be acquired by an entity like Yahoo. However, he also said he would be open to an acquisition that leaves the company as it is.

A source close to the negotiation, said the two are proceeding along rapidly and that would likely result in an official offer as soon as Marissa Mayer the Yahoo CEO could get the approval from her board.

It is thought Mayer favors an acquisition instead of a partnership or investment.

Karp has said he wants to remain on as CEO if a deal was reached and sources claim he would stay on as CEO in the deal that is currently being worked out.

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