Microsoft, the world’s largest software maker, is said to have agreed to raise its offer for Yahoo! in an attempt to appease Yahoo! shareholders and break the stalemate between the companies.
Microsoft is reportedly considering raising its cash and share offer, currently valued at $29.06 a share, to either $32 or $33 to win over Yahoo!’s institutional shareholders who feel its current bid undervalues Yahoo!, sources said.
Microsoft’s board met yesterday to discuss a range of options, and its chief executive Steve Ballmer has personally called some of Yahoo!’s shareholders, the largest of which is Capital Research Global Investors, with a 6.4 per cent stake, to get their support for a bid in that range.
A $33 a share bid would value Yahoo! at $46.2 billion. Yahoo! has 1.4 billion shares in issue. Yahoo! shareholders are said to be holding out for an offer between $35 and $37 a share.
Mr Ballmer had earlier threatened to begin a proxy battle to remove Yahoo!’s board if the companies did not resolve their dispute by last weekend, but Saturday’s deadline passed without any deal being reached, and Microsoft is yet to make its next move.
Holding off from a hostile approach would give Microsoft shares a chance to recover from their recent fall - potentially increasing the value of its offer for Yahoo!. Since the bid was announced, Microsoft shares have fallen by about 13 per cent to close at $28.52 yesterday.
Analysts have suggested that Yahoo! shares would likely drop substantially if Microsoft abandons its bid.
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