Microsoft-Yahoo deal more likely, say analysts

12 February 2008

Mumbai: Microsoft is set to raise the pressure on Yahoo even as the Sunnyvale search firm's board of directors officially rejected its $44.6 billion take-over offer.

A rejection of Microsoft's bid for Yahoo is also expected to spur litigation in courts, analysts feel.

Yahoo's decision to reject the offer was earlier seen as an effort to get Microsoft to raise its $44.6 billion ($31 a share) proposal or as buying time for other options.

Yahoo's stock, which rose 2 per cent in regular trading to close at $29.87, up 67 cents, is still below the Microsoft offer.

An outright rejection of the offer is likely to invite shareholder lawsuits in the absence of other bidders offering anything close to this price, analysts said.

Microsoft also stands ready for a long battle and it may use all take-over tactics, including nominating its supporters to Yahoo's board of directors or making its offer directly to Yahoo's shareholders.