Microsoft and Yahoo in takeover talks: source

SAN FRANCISCO, May 2, 2008 (AFP) – Microsoft and Yahoo began takeover talks Friday with the US software giant open to raising its 44.6-billion-dollar bid for the struggling Internet pioneer, a source close to the situation told AFP. Yahoo and its unsolicited suitor are privately discussing the buyout bid after months of negotiating indirectly with public comments, emails and online postings, the source said.

“They are talking — there are no guarantees,” the source told AFP.

“Microsoft signaled it might raise the price and the question is how far. It could still fall apart.”

Microsoft has indicated it might raise its ante from 31 to 33 dollars per share and the Yahoo board has signaled it might accept an offer of 37 dollars per share, according to Canaccord Adams analyst Colin Gillis.

“They are close enough now that to sit down and talk about it makes sense,” Gillis said of Microsoft and Yahoo.

The negotiations appeared to break tension that has built since Yahoo rejected the offer Microsoft put on the table on February 1 and ignored an April 26 deadline the software maker gave the California firm to accept.

“It’s what they should have done from day one,” Silicon Valley analyst Rob Enderle told AFP.
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