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In the Yahoo-Microsoft takeover battle, Yahoo's 40 percent stake in Yahoo Japan is treated as an afterthought: Spare goods to be sold off to boost shareholder returns. But Yahoo Japan, in its home country, is Google, eBay, and Yahoo rolled into one. It's worth $29 billion — more than Yahoo itself was worth before the Microsoft bid. Which raises the question: Why isn't Yahoo Japan the one buying Yahoo? Before you dismiss it, consider the precedents.

In the U.S., 7/Eleven is one of many convenience-store chains. In Japan, it's an iconic retailing powerhouse — and it has owned 7-Eleven in the U.S. for 18 years.

Another model: The Seagate-Veritas deal. Seagate, a hard-drive maker, owned a large chunk of Veritas, a storage-software company it had spun off. In a $20 billion deal, Silver Lake took Seagate private, swapping out Seagate shares for Veritas shares. Similarly, Yahoo Japan could unlock its shares held by Yahoo by swapping them for a large equity stake. Complicated, but not inconceivable, especially if private equity injects some cash — and money managers might be keener on a direct stake in Yahoo Japan than in the U.S. operation.

The key to such a deal would be Softbank, which owns 41 percent of Yahoo Japan. Softbank CEO Masayoshi Son has close ties to both Microsoft chairman Bill Gates and Yahoo CEO Jerry Yang, who sits on the board of Yahoo Japan.

Softbank also owns 3.9 percent of Yahoo, but it also owns, as does Yahoo, a large stake in Alibaba, the operator of Yahoo China. Alibaba's management is reportedly restive about the prospect of Microsoft getting a say in their affairs. Softbank might throw its Alibaba stake into the combination, which would give Alibaba an exit in the public markets without the risk of an IPO, and the new Yahoo majority control of its Chinese websites.

Making the numbers work, especially when Microsoft could easily raise its bid, is a challenge. In some ways, selling out to Yahoo Japan would be as humbling to Yahoo's management as selling to Microsoft. But while Tokyo is more distant than Redmond, I suspect the cultures are more compatible.

The fundamental logic of Microsoft's bid is that it can do more with the Yahoo brand than Yahoo itself can. Many doubt Microsoft will actually manage that. Yahoo Japan has proven it can.