Yahoo Inc. was engaged in serious negotiation talks with Microsoft Corp. on Friday as both sides tried to avert a hostile takeover battle, according to people familiar with the discussions.
Microsoft has expressed willingness to pay more than the $44.6 billion it offered Jan. 31, those people said on condition of anonymity because the talks were confidential. One person said Microsoft had increased its bid by “several dollars” a share.
The people cautioned that no deal was imminent.
Yahoo shares gained $1.86, or 7 percent, to $28.67 on reports that the two companies were closer to a deal, as investors hoped Yahoo would exact a higher price from the Redmond, Wash.-based software giant. Microsoft shares fell 16 cents to $29.24.
Microsoft and Yahoo declined to comment.
Microsoft had vowed to launch a proxy fight to take control of Yahoo’s board of directors if the Sunnyvale, Calif.-based Internet company didn’t agree to a buyout deal by April 26. But last week passed with no escalation of the takeover fight, which has dragged on for three months.
Microsoft can’t be certain it would win a potentially long fight for control of Yahoo, especially at the cash-and-stock offer currently valued at $29.39 a share, and it would be sure of losing more Yahoo executives during the delay.
Yahoo, whose board of directors was meeting Friday, has been trying to wring at least a few dollars more per share out of Microsoft.
