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.

In the end, he wasn’t in some sub-Saharan refuge, an Asian island paradise or a secluded European spa … fugitive former hedge fund manager Samuel Israel III (pictured right) was holed up in a mobile home (pictured below). Israel handed himself over to authorities in Massachusetts to start his 20-year prison sentence after having faked his suicide to avoid doing time. Israel, who co-founded Connecticut hedge fund Bayou Group, in 2005 pleaded guilty to a scheme to fabricate returns and cheat investors out of $450 million. He was sentenced in April. Police said his mother convinced him to turn himself over to police. If he was hoping for another shot at fleedom, he can forget about it. “There is not the slightest possibility that I or any other judge would release you at this point,” Judge Michael Ponsor told Israel before turning him over to U.S. Marshals.

Landmark Communications could announce the sale of the Weather Channel to a group made up of NBC Universal, Blackstone and Bain Capital in the next day or two, sources briefed on the matter said. The final price on the cable network, which produces national, regional and local weather-related programs, is expected to be between $3 billion and $3.5 billion, and likely at the higher end of that range, the sources said. The parties have been negotiating directly with Landmark since Time Warner withdrew its bid two weeks ago. There is always a small chance things could fall apart or slow down at the last minute, but absent any such unforeseen problems, the deal should be announced in the next couple days, one of the people said.

BHP Billiton said U.S. antitrust authorities have cleared its unsolicited $170 billion bid for rival miner Rio Tinto. The company’s announcement said the clearance satisfied part of U.S. antitrust law requirements. U.S. law gives antitrust authorities the right to re-open their investigation if new information comes to light before the transaction closes, experts say. However in reality, the United States has now given full clearance to the deal, not that U.S. opposition is a major issue for the mega merger. Problems are more likely to be raised in Asia and Europe.

British market research company Taylor Nelson Sofres rejected an improved approach worth 1.08 billion pounds ($2.14 billion) from WPP, saying it still preferred its merger with German peer GfK. WPP’s latest proposal substantially undervalued the company, said TNS, which had previously opened its books to WPP after rejecting previous approaches. TNS is the world’s third-biggest market research company, with clients such as Procter & Gamble and Unilever, while GfK is the world’s fifth-biggest and counts Panasonic and Henkel among its customers. A completed tie-up would step up pressure on market leader AC Nielsen in an industry which has become increasingly important as companies hunt for more information on their clients and services. Analysts have said from the start that WPP, which would merge TNS with its Kantar business, could disrupt the TNS-GfK deal, bidding up the price.

Storied New York public relations advisor Kekst & Co sold out to French advertising and communications company Publicis Groupe SA for an undisclosed sum. Kekst, known for advising on high profile financial takeovers, was founded in 1970 by its current chief executive, Gershon Kekst, 73, and employs about 70 people. The company, based on Madison Avenue, New York, has advised on more mergers and acquisitions than any other public relations agency over the last two decades, according to data from Corporate Control Alert. One industry insider who asked not to be identified, but is not involved with the deal, speculated that the transaction could be worth around $150 million. The figure assumes estimated profits of $20 million and an estimated deal multiple of 6 or 7 times, plus a premium, that person said.

Other deals of the day:

* U.S. private equity house Lone Star could offer shares in Korea Exchange Bank in a block sale if the pending $6.3 billion deal to sell control of KEB to HSBC falters, KEB chief executive said.

* Australian bank Macquarie has applied to Chinese regulators to buy a nearly 20 percent stake in a trust company, in order to expand its corporate banking and wealth management services in China, sources with direct knowledge of the deal said.

* Huawei Technologies, China’s largest mobile phone equipment maker, has narrowed the field of bidders for a stake in its mobile devices unit — reported to be worth more than $2 billion — to five private equity companies, sources said.

* Telecommunications firm Pacnet said it had signed a joint venture with China-based firm Zhong Ren Telecom, to offer Internet protocol services to Chinese companies and expand its presence in the country.

* International Business Machines said it has bought privately held software maker Platform Solutions Inc and the two companies have dropped their legal complaints against each other.

* Northstar Neuroscience said it received an unsolicited offer from Tang Capital Partners to buy the company for $2.25 per share.

* Hedge fund SAC Capital reported that it had cut its stake in Take-Two Interactive Software to 4.4 percent from 5.3 percent.