Capital Research and Managemet Meet With Microsoft to Up The Deal

February 8th, 2008 at 12:00 am

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Yahoo’s top investor, Capital Research and Management met with Steve Ballmer and other Microsoft executives to discuss how far Microsoft is willing to up the price and if course Microsoft’s plans if ever the deal pushes through.

Capital Research and Management owns 11.4% of Yahoo and about 6% of Microsoft.  Of course if one of its babies try to gobble up the other one, then it should know how it can profit from that.  CRM also wanted to know how much Microsoft was willing to add to the already sweet $44.6 billion deal.  "They want to make sure they won’t lose more money on their Microsoft stake than they will gain from their position in Yahoo!," said a source fromt he NY Post.

The Microsoft offer to buy Yahoo is a week old and Yahoo has not said yes yet.  The offer was already a 60% premium on the current Yahoo stock.  However,  Yahoo was still trying to get somebody else to compete with the offer and apparently failed.  Yahoo is also looking into allying itself with Google by outsourcing its search to the market leader.  This would probably profit Yahoo for a while but that leaves Google with no competition.  These are the options Yahoo is looking at now and CRM isn’t close behind.

Microsoft on the other hand is also desparate to improve their search market share and would probably be willing to offer more for Yahoo.  The funny thing is, Microsoft’s shares have dropped 10% since making the offer to yahoo and their $44.6 billion is now down to about $40 billion on paper.

Information on what was accomplished during the CRM-Microsoft meeting have not been disclosed yet and analysts say that there’s a 40% chance Microsoft will up their offer.