After a three-month standoff, Microsoft was in active merger talks withYahoo on Friday, several people involved in the discussions said.

Microsoft, which had threatened to abandon its bid or initiate an attempt to oust Yahoo’s board, has increased its offer “by several dollars,” one of the people said.

But a deal was still far from certain. A person involved in the discussions said the chances of a friendly deal being reached were “still no better than 50-50.”

The talks were an effort by Microsoft to reach a negotiated agreement and avert the collapse of a blockbuster deal that could reshape competition on the Internet and give Microsoft more heft in its intensifying rivalry with Google. The discussions represent a breakthrough after weeks of behind-the-scenes maneuvering on both sides.

The higher bid came as Yahoo’s board was holding a two-day meeting. Exact terms being discussed could not be learned, but according to the people involved in the talks, Microsoft suggested it was willing to pay more than $33 a share. Yahoo is still holding out for at least $37 a share, these people said. These people were not authorized to speak publicly because the negotiations were confidential.

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Posted at 07:15AM May 04, 2008 by Kevin P McAuliffe in Inform  |  Comments[0]