updated 11:25 am EDT, Tue March 25, 2008
MS May Raise Yahoo Bid
Microsoft may have no choice but to raise the value of its bid for Yahoo, according to a new investment report by Citigroup. Although it started at $31 per share and was characterized as "generous" by Microsoft, the offer is now predicted to increase by an unspecified amount as the Windows developer struggles to overcome resistance by Yahoo's executive board.
Yahoo chief Jerry Yang and others are widely believed to be actively shopping the early search engine company around to other firms, hoping for an alliance or merger that would make Microsoft's hostile buyout attempt prohibitively expensive. AOL, Google, and News Corp. have all at one point been suggested as possible candidates, though neither Yahoo nor any of its rumored partners have confirmed such talks.
Citigroup warns against assumptions that Yahoo is strictly looking to avoid a Microsoft deal and that discussions with other firms may be a pressure tactic. "We believe this could serve as a forcing function to a higher Microsoft bid," the financial institution says.
Microsoft has previously said that it's determined to win its bid, which it hopes will provide a stronger position to attack Google's control of the web advertising and search markets. The Redmond, Washington-based company has said that it will likely take out a loan to pay for Yahoo to avoid draining its cash reserves too quickly.