WebProNews

Negotiations ongoing, no hint of a deal yet

Negotiations could lead to a middle ground in Microsoft's effort to acquire Yahoo, which claimed a greater worth than Microsoft's initial bid at the end of January.

Public bluster gave way to news of private negotiations between the two sides. Yahoo and Microsoft looked only a few dollars per share away from hammering out an agreement that would bring the color Yahoo purple to Microsoft's house.

Yahoo previously stated it wouldn't say no to a takeover, if the price met expectations. Some considered those expectations far too lofty given Yahoo's woeful performance on Wall Street in the two years prior to Microsoft's unsolicited bid.

But it looks like executives and their banking advisors will work on nailing down a deal. The Dealbook blog cited a source on the discussions, saying active merger negotiations were under way.

"One shareholder said he believed an offer of $34 would probably be sufficient to consummate a deal," Dealbook said. Gee, I think I've heard that suggested elsewhere...

The chance still exists these late talks could go pancake-shaped, with a potential friendly deal turning decidedly unfriendly. With billions in play, the two sides must want to finish the talks with as little extra cost as possible, especially on the Microsoft side of the table.

One part of the business world wants to see the two find some kind of closure. Valleywag cited an unnamed Madison Avenue ad executive on the industry's impatience with the protracted negotiations:

Yahoo and Microsoft disappoint clients separately, he says, and they would disappoint clients together:

Microsoft and Yahoo are both underperforming the market and the combination will distract and slow them further - causing additional market share erosion for them as smaller, more nimble, smarter publishers and technologies pop up to fill the void. [The merger drama] is a short-term disservice to digital media, though, because it distracts and clouds.

It sounds like the first order of business after these discussions end will be for Microsoft and Yahoo to find out where they may be disappointing the clients they need to fight Google and DoubleClick for online advertising profitability and success.