Microsoft and Yahoo! renew their marriage talks

Ballmer expands dowry

By Cade Metz in San Francisco • Get more from this author

Posted in Financial News, 2nd May 2008 22:00 GMT

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Microhoo Microsoft and Yahoo! have pulled their chairs back up to the proverbial negotiating table.

Citing an unnamed source, The New York Times insists the two giants are now in "active merger talks." Apparently, Microsoft made that outrageous Yahoo! bid even more outrageous, raising its valuation of Jerry Yang and crew "by several dollars" a share.

So, Microsoft is saying that Yahoo! is worth somewhere between $46bn and $52bn. Yesterday, word was that Ballmer and the Ballmerettes were mulling a raise to $33 a share, before some large Yahoo! shareholders insisted on $35 to $37.

One shareholder told the The New York Times that $34 could get the deal done.

More than three weeks ago, Microsoft threatened a proxy fight if Yahoo! didn't agree to its original $44.6bn (about $29 per share) offer within three weeks. Then the company threatened to walk away from the deal entirely. All of which leads us to believe that Microsoft threats are meaningless - and that Ballmer really wants Jerry Yang.

The Times goes on to say that both Microsoft and Yahoo! are raining phone calls onto shareholders, trying to find out what sort of deal they'd accept. But the paper's inside source warned that talks could still break down. What a smart source. ®

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