In 2008 MSFT and Icahn....
...proposed that YHOO
* Sell or spinoff Asian assets
* Issue a special dividend
* Keep YHOO core...in which MSFT would make a substantial investment...at a substantial premium.
This seems to be the same path YHOO is going down now. And it makes a lot of sense.
If YHOO sells it's Asian assets and issues a special dividend, I believe MSFT will then make a large investment in YHOO's core at a very high premium.
MSFT IMO will either make a direct tender offer to shareholders for a portion of their shares....
...or MSFT will buy preferred shares or debt from YHOO, and YHOO will use the proceeds for a buyback.