Microsoft, Yahoo Deadlocked

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It's oddly quiet on the Microsoft-Yahoo! battlefront. Perhaps too quiet. More than two weeks after the software giant launched its unsolicited stock-and-cash bid, worth about $42 billion currently, the two companies seem at a standstill. The companies could be talking behind the scenes trying to get a deal done. But just as likely, each could be waiting for the other side to blink.

Those close to Microsoft (MSFT) argue that it's Yahoo's turn to make a move. In Redmond's best-case scenario, Yahoo's board would capitulate and agree to a negotiated combination. Yahoo (YHOO) executives, though, seem unwilling to make a deal, especially at Microsoft's offer price, which represented a 62% premium over Yahoo's pre-offer stock price.

Since the original $31-a-share offer was made public, analysts and investors have frequently said they expect Microsoft to boost its bid, perhaps to about $35 a share. Some think the offer could climb north of $40 a share. The logic goes that a cash-rich, debt-free Microsoft needs to get the deal done soon as part of its effort to narrow Google's lead in the online advertising market.

Read the whole story at Business Week