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Yahoo shares boosted on bid hopes | |
(30 minutes later) | |
Shares in Yahoo jumped 3% amid expectation Microsoft is preparing to launch a hostile bid for the company. | Shares in Yahoo jumped 3% amid expectation Microsoft is preparing to launch a hostile bid for the company. |
Microsoft may increase the offer for the internet firm it made in February, which was then worth $44.6bn (£22.4bn). | Microsoft may increase the offer for the internet firm it made in February, which was then worth $44.6bn (£22.4bn). |
The software giant wants to do a deal to be able to compete with Google, which dominates the lucrative market for internet advertising. | The software giant wants to do a deal to be able to compete with Google, which dominates the lucrative market for internet advertising. |
Yahoo rejected the cash and share offer as inadequate, and has since ignored a Microsoft-set deal deadline. | Yahoo rejected the cash and share offer as inadequate, and has since ignored a Microsoft-set deal deadline. |
Microsoft's bid was originally worth $31 a share, but the value of the offer has since fallen as the Microsoft share price has declined. | Microsoft's bid was originally worth $31 a share, but the value of the offer has since fallen as the Microsoft share price has declined. |
At 1640 BST, Microsoft's shares were practically unchanged at $29.38. Meanwhile, Yahoo's shares were trading at $27.79. | At 1640 BST, Microsoft's shares were practically unchanged at $29.38. Meanwhile, Yahoo's shares were trading at $27.79. |
'Negotiating tactics' | 'Negotiating tactics' |
Microsoft's chief executive Steve Ballmer has said the existing proposal was a "generous" one, as it offered Yahoo shareholders 62% more for their shares than they were worth the day before the bid. | |
The Yahoo board was given until the 26 April to accept the software giant's offer or face a hostile bid. | |
In a letter to the internet firm's board on 5 April, Mr Ballmer threatened to put the proposal directly to Yahoo shareholders and remove the firm's directors. | |
After the deadline passed without a response from Yahoo, the Microsoft board met this week to discuss its next move. | |
But the meeting ended without an agreement, according to reports. | |
Online advertising | |
There are suggestions Microsoft will up its bid to around $33 per share, but it is understood that Yahoo shareholders are hoping for $35 to $37 per share. | There are suggestions Microsoft will up its bid to around $33 per share, but it is understood that Yahoo shareholders are hoping for $35 to $37 per share. |
Mr Ballmer has in recent weeks threatened to either lower the offer or to walk away from the deal. | |
But some analysts dismiss this as a negotiating tactics. | |
Microsoft wants to increase its share of the lucrative online advertising market, currently dominated by search engine firm Google. | |
It was worth $40bn in 2007 and is predicted to grow to $80bn by 2010. | |
When Microsoft announced its offer in February it said that "together Microsoft and Yahoo can offer a competitive choice while better fulfilling the needs of customers and partners". |