Microsoft-Yahoo merger talks underway?

Microsoft and Yahoo are in genuine talks to agree on a merger, the New York Times says. The report claims to know people involved in the negotiations who say that Microsoft has agreed to raise its $31 per share bid by "several" dollars, in effect overcoming resistance by Yahoo to a deal which the latter has previously said undervalues its business. The conditions for the deal are in flux and aren't currently available.

These same sources also caution that a merger isn't certain and that the talks could either be hindered by specific details or fail outright if certain terms aren't met. Major shareholders are also reportedly being polled as to what values they would accept for a per-share offer and, in some cases, have been holding out for $35 per share.

If accurate, the sit-down between the two companies will represent the end to a three-month-long deadlock that began when Microsoft first submitted its deal. Microsoft has so far insisted that its bid, initially worth $44 billion, was equal to or above Yahoo's actual value and has recently threatened both to circumvent Yahoo's board of directors by making an offer to shareholders as well as to back out of the deal if Yahoo refused the originally offered terms.

Neither company involved in the discussions has commented on the subject, though any such merger may complicate a similarly rumored Google AdSense deal that Yahoo has been considering to guard against a low Microsoft takeover bid.

Filed under: industry
Other story tags: Microsoft, Yahoo