The group’s shares, which have fallen by around half of their value since the beginning of the year gained more than 15 per cent during trading yesterday.
The embattled firm, which narrowly avoided insolvency in 2009, says it will take advantage of Microsoft’s alliance with Yahoo to offer “compelling search, mobile and local advertising solutions to small and medium businesses”.
As part of the deal, Microsoft will also help to boost Yell’s new cloud-based services. No financial details of the deal were released.
The announcement fits Yell’s pledge to increase its presence in digital media in a bid to counter a chronic decline in its print business.
The firm, which has net debt of £2.8bn, saw its full year revenue fall 12.4 per cent to £1.9bn in the last financial year.
On Monday Yell agreed to buy US technology start-up Znode for $20m (£12.5m), pushing its shares up nine per cent. The firm says Znode gives Yell e-commerce technology that it can use to connect small businesses with consumers on a local level. It will be incorporated into the group as part of a new division, called Yell Connect.
Shares in Yell closed 15.9 per cent up at 11p yesterday.