By Heather Havenstein
October 10, 2008

A Yahoo Inc. investor yesterday proposed that Yahoo sell itself to Microsoft Corp. for $22 a share, according to a report from the Reuters news service. Yahoo was trading at $12.84 at 10 a.m. EDT on Friday.

Mithras Capital -- which owns 1.9 million shares, or 0.14 %, of Yahoo -- said that once the deal concludes, Microsoft could sell off Yahoo's Asian assets and non-search businesses to gain $3 billion in cost savings and $2.8 billion in tax benefits. Once the dust settles, Mithras said, Microsoft would have paid $10 billion for Yahoo's search business -- $2 billion less than it offered earlier this year, according to the report.

Both Microsoft and Yahoo declined comment on the Mithras proposal. Yahoo in June ended merger talks with Microsoft. At the time, Yahoo said it rejected the offer because Microsoft was only interested in its search business. The merger talks were prompted by Microsoft's $44 billion cash and stock offer in February to buy all of Yahoo.

Mark Nelson, a partner of Mithras Capital, said he planned to send a letter proposing the deal to Microsoft and Yahoo Thursday night, according to the Reuters report. "It is imperative for Microsoft to act now, while the Yahoo-Google deal is mired in regulatory concerns, and before Yahoo strikes a deal with AOL," Nelson said in a press release.