Microsoft moves closer to Yahoo deal

Published on Saturday 24 May 2008 13:48

MICROSOFT is poised to offer the extra dollar a share that could provide the breakthrough for the software giant to finally land Yahoo, according to Silicon Valley sources this weekend.

Earlier this month, Microsoft ran out of patience and withdrew a $33 per share bid, valuing the beleaguered global internet search engine at $45bn.

Microsoft wants to take on arch rival Google to compete for highly lucrative online global advertising accounts.

Yahoo's chief executive, Jerry Yang has come under increased pressure to settle, especially from key shareholder and billionaire Carl Icahn, who wants to replace the entire board and push for a deal with Microsoft. On Friday, the company announced it was delaying its annual general meeting until the end of February in what was seen as another sign that its resistance is weakening.

Microsoft has been mulling over a "halfway-house" move to buy Yahoo's search-advertising business, which analysts value at between $11bn and $21bn.

But former Merrill Lynch senior analyst and Silicon Valley insider Henry Blodget claims

Yahoo is prepared to do a full-company deal if the price is right – especially as its board becomes more anxious about negative shareholder reaction.

"Full acquisition at $34 is getting more likely all the time," he said.

One IT senior source said: "This is all about tactics and strategy but Microsoft will absolutely buy Yahoo."