With tens of billions in the bank collecting dust since its failed bid for Yahoo, and the elusive promise of the Internet still beckoning, Microsoft returned to the market for Internet search businesses with a $486 million purchase of Greenfield Online, the U.S.-listed owner of European price comparison website ciao.com. The buy is meant to help lift Microsoft out of fifth place in the European search market by giving a boost to its Live Search platform. Google’s monster lead in the search market is a whopping 62 percent and 79 percent in Europe, according to the most recent data published by Web usage tracker ComScore. Microsoft has a 2 percent market share in Europe and 9 percent worldwide, behind both Google and Yahoo. In Europe, Microsoft is also outranked by online auction site eBay and Russia’s Yandex.

Four large hedge funds, all Huntsman shareholders, have proposed a plan to finance at least $500 million of the $6.5 billion buyout of the chemical company by a unit of Apollo Global Management. Hedge funds Citadel Investment Group, D.E. Shaw & Co, MatlinPatterson Global Advisers and Pentwater Growth Fund, and as of this morning, the Huntsman family, have agreed to team up on the financing plan, but Apollo’s Hexion Specialty Chemicals unit rejected the plan last night, saying Huntsman’s increased debt and decreased earnings since the deal was struck in July 2007 would no longer make a combined company solvent. “We are not seeking to renegotiate this transaction,” Hexion responded in a statement. “We are seeking to terminate it, and obtain judicial confirmation that Hexion has no obligation to pursue the acquisition or to pay Huntsman a termination fee.”

Allianz is set to sell Dresdner Bank to Commerzbank, sources with direct knowledge of the matter say, in a deal that will fuse Germany’s second- and third-biggest lenders. The deal, to be announced as soon as this weekend, will see Commerzbank take a 51 percent stake in Dresdner and buy the rest later, the sources said. Taking over Dresdner, which analysts estimate to be worth about 9 billion euros ($13 billion), will create a group to rival flagship lender Deutsche Bank and change the face of banking in Germany, Europe’s biggest economy. It will give Commerzbank a badly needed leg up in its home market, which is dominated by state not-for-profit lenders and allow Allianz to end an unhappy marriage that unsuccessfully tried to match investment bankers with insurance salesmen. The deal is likely to result in heavy job cuts, which would have been avoided had Allianz chosen to sell to another would-be buyer, China Development Bank.

Bain Capital and Carlyle Group are among the private equity firms through to the next round of bidding for a stake in the telecom unit being spun out of Hong Kong’s PCCW, according to sources. A deal, expected to come late this year, could fetch $2.5 billion. Two sources involved in the deal said Goldman Sachs’s private equity arm was considering joining TPG Capital in its own offer for the unit, though they could not confirm that the two had officially linked up. Sources also said Apax Partners moved into the next round of bids, due in mid to late October. PCCW, Hong Kong’s former monopoly fixed-line carrier, said in May it planned to fold its core media and telecoms businesses into a separate firm called HKT and sell 45 percent of the new company. At the time, PCCW shares had dropped 90 percent since 2000.

U.S. private equity firm Carlyle Group is seeking a new investor for Willcom, a Japanese mobile phone operator needing $1.8 billion to develop new technology services, four people familiar with the matter said. Carlyle, which owns 60 percent of unlisted Willcom, has hired Merrill Lynch, to find an investor to purchase new shares in Willcom, they said, asking not to be identified because the information is not public. Carlyle is also willing to sell part of its stake, the financial sources said. Electronic parts maker Kyocera owns 30 percent of Willcom and KDDI holds 10 percent. Willcom said in November it would need the money by the end of 2015 to develop new PHS technology to better compete against NTT DoCoMo, KDDI and Softbank. In December, it won one of two licenses from the government to provide next-generation wireless Internet access.

Other deals of the day:

* Australia’s takeover regulator said it has received an application from Britain’s BG Group requesting more information from Origin Energy to support Origin’s rejection of BG’s A$13.8 billion ($11.9 billion) takeover bid.

* The fate of a $2.7 billion deal involving Malayan Banking taking over Bank Internasional Indonesia is in Malaysia’s hands and the capital markets watchdog will not make exceptions to existing rules, Indonesia’s regulator said.

* Industrial & Commercial Bank of China, the world’s biggest bank by market value, is buying 100 percent of Russian bank Rosevrobank for between $800 million and $850 million, a newspaper reported.

* Dutch insurer Aegon said it is buying 50 percent of the insurance business of Spain’s Caixa Terrassa for 190 million euros ($281 million) as it seeks newer markets to fuel growth.

* Japanese video game maker Square Enix said it seeks to buy more than half of game developer Tecmo to improve its global competitiveness, in a deal worth at least $102 million.

* British oil and gas services firm Petrofac said it has bought production technology firm Caltec for a maximum 30 million pounds ($54.85 million).

* Hallin Marine Subsea International, which provides subsea services to the oil and gas industry, said it has bought engineering consultant to the energy sector, Prospect Flow Solutions, for up to 4.65 million pounds ($8.50 million).

* Turkish Airlines said its management board had decided to bid for a 49 percent stake in Bosnia’s BH Airlines.

The yo-yo that is Lehman Brothers’ stock took another spill before the market opened on Monday, after a top South Korean regulator threw cold water on the idea of a state bank buying the battle-scarred Wall Street warrior. Financial Services Commission Chairman Jun Kwang-woo told reporters Korea Development Bank (KDB) should be a “cheerleader” and let local private banks take the lead in any such purchase. KDB’s interest lit a rocket under Lehman’s shares on Friday. When asked about the status of KDB’s possible interest in Lehman Jun said: “That would be an international marriage. Would you get married just after one or two blind dates?” A couple of blind dates might be a step up from the shot-gun buyouts that South Korea’s banks faced after the Asia crisis.

Canada’s Precision Drilling Trust will buy U.S. driller Grey Wolf for $2 billion in cash and stock, creating one of the largest North American oil and gas rig operators. The announcement comes a month after Grey Wolf shareholders voted down a proposed purchase of well-servicing company Basic Energy Services. Precision Drilling, Canada’s largest oil and gas driller, first made an unsolicited purchase offer for Grey Wolf in June. News that a deal had been struck emerged on Sunday. Based on financial results through June, the combined companies will have annual revenue of $1.8 billion.

Germany’s Commerzbank could buy insurer Allianz’s Dresdner Bank possibly by the end of this month, according to a source familiar with the situation at the bank. German weekly Welt am Sonntag said an agreement between the two was possible within the coming week. The two companies had agreed on the basic principles of the transaction, according to the paper, which said Commerzbank would buy Dresdner for slightly more than 9 billion euros ($13.38 billion) and Allianz would vouch for writedowns on the balance sheet of Dresdner of up to 1 billion euros. The sums were still being negotiated. Allianz would have a stake of slightly less than 30 percent in the merged bank, the report also said.

Australia has approved Chinese aluminum giant Chinalco’s recent purchase of a minority stake in Anglo-Australian miner Rio Tinto, but warned the Chinese firm against buying more shares without prior approval. State-owned Aluminium Corp of China (Chinalco), backed by U.S. peer Alcoa, began amassing shares this year with the aim of taking up to 14.9 percent of Rio, the target of a $127 billion takeover bid from rival BHP Billiton. Treasurer Wayne Swan said Chinalco had already vowed not to raise its stake above 14.99 percent without receiving fresh government approval and, secondly, not to seek to appoint a director to Rio Tinto’s board. Rio Tinto is at the center of a tug-of-war that reflects China’s anxiety over BHP Billiton’s proposed all-share bid for Rio, which would create a titan unrivaled in its degree of control over a wide range of industrial commodities. Rio is a major aluminum producer and both it and BHP are global suppliers of copper, but China’s biggest concern about the takeover bid surrounds iron ore, which is used in steel-making.

Other deals of the day:

* Japanese brewer Kirin Holdings is expanding its food business in Australia through unit National Foods’ $780 million acquisition of Dairy Farmers, helping it diversify away from a shrinking domestic beer market as Japan’s population ages.

* Lufthansa has formally announced its interest in acquiring a stake on offer in Austrian Airlines, a spokesman for the German carrier said. OeIAG is offering its 43 percent share in Austrian, worth around 157 million euros ($233.4 million), but said the size of the stake sold would depend on preserving an Austrian group of core shareholders owning 25 percent between them.

* Irish food group Glanbia said it would spend $315 million to buy Optimum Nutrition Inc, a U.S. maker of supplements for body builders, which will use by-products of its cheese manufacturing.

* Singapore Telecommunications said it has bought a 60 percent stake in Singapore Computer Systems for S$140 million ($99 million) as it seeks to boost its IT business.

* Norwegian shipping group DOF ASA said that uncertainty in the financial market had forced it to re-evaluate a planned buyout of offshore services group DOF Subsea.

* MLP Chief Executive Uwe Schroeder-Wildberg was quoted by Swiss finance newspaper Cash Daily as saying he believes Swiss Life’s plan to take over the German financial adviser would fail.