Microsoft announces $3.75 billion bond sale

Company issues first long-term debt and sparks fresh takeover rumours

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By  Vineetha Menon Published  May 12, 2009

Microsoft is selling $3.75 billion in bonds to investors, making it the first long-term debt the company has issued in its long history which dates back to 1975.

It is selling notes that mature over the next 5, 10 and 30 years - $2 billion of 2.95 percent notes due June 1, 2014; $1 billion of 4.2 percent notes due June 1, 2019; and $750 million of 5.2 percent notes due June 1, 2039.

The offering closes on May 18th and, in a company statement, Microsoft said it would use the proceeds for “general corporate purposes, which may include funding for working capital, capital expenditures, repurchases of stock and acquisitions.”

It already holds $25 billion in cash and short-term investments, so the move is not seen as a resuscitation effort but rather fuelling speculation that it is once again on the prowl for an acquisition target.

The Wall Street Journal believes that it’s gunning either for SAP or Yahoo!, adding that proceeds could just as easily be used by Microsoft to repurchase stocks as part of its buyback program announced last year.

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