After months of playing hard ball with each other, Microsoft and Yahoo! are looking closer to consummating their marriage than ever before. The Associated Press (AP) reports that finally, Microsoft has dangled a sweeter carrot, if you will, hoping to reach a friendly deal after all those months of haggling.
The software major has upped its offer beyond the original value of $44.6 billion aka $31 per share, according to an unnamed source familiar with the deal. Specifics of the offer haven't yet been revealed as negotiations are still confidential in nature.
In February this year, Microsoft made a proposal to the Yahoo! Board of Directors to acquire all of the outstanding shares of Yahoo! common stock for $31 per share -- representing a total equity of approximately $44.6 billion. Whereas Yahoo! famously spurned this offer, alleging it 'substantially undervalued' the company's assets.
After which, Yahoo! went about business as usual (at least on the surface of it), with Microsoft too, defending its turf, and strictly maintaining that its offer is 'full and fair', giving absolutely zilch indication of raising the bid at any point of time. Needless to say, the value of Microsoft's original offer, made half in cash and half in stock, went down and is today valued at $42.3 billion, or $29.40 per share, reflecting the decline in the company's shares since it began pursuit of its fair suitor!
Coming back to the latest report of Microsoft finally fattening its offer in a last-ditch attempt to win-over Yahoo!, there have been no comments either from Microsoft or Yahoo! regarding the matter. Negotiations though are expected to run into this weekend. And word is that Microsoft's Board had met Yahoo! earlier this week to consider raising the bid as high as $33 per share, which is about $47.5 billion.
Whatever the outcome of the discussions, the ripples will be felt across the whole of the Internet. If indeed, Microsoft and Yahoo! end up shaking hands on the deal, it will mark a significant step towards uniting two hi-tech powerhouses whose online services are used by more than 500 million people worldwide. If the two companies continue to remain at loggerheads, Microsoft could either risk forcing a sale by replacing Yahoo!'s existing Board with ten directors more inclined to approve the deal or as Ballmer said, simply choose to withdraw its offer and walk away from Yahoo!. Most analysts are doubtful about the latter happening given Yahoo! remains Microsoft's ticket to eroding Google's dominance over that phenomenon called the Internet.
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