Microsoft/Yahoo: No Deal Today, Markets Look For Announcement Early Monday

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Talks between Microsoft and Yahoo continue as the market closes and the business week comes to an end. Every signal is that the two sides are close to finalizing a deal, somewhere between $33 and $37/share.

Microsoft has signaled that they’ll go as high as $33 this week. The alternate board members, who must be notified before any announcement of Microsoft going officially hostile, have not been contacted by Microsoft, sources say.

The market agrees, with Yahoo stock up as much as 11% today. Yahoo closed at $28.68, up about 7% for the day.

Analysts we spoke to today, emphasizing that they have no inside information, say they expect a deal to be wrapped up over the weekend and announced on Monday. Look for a cash/stock mix in the $35 range, announced before the market opens, possibly with a conference call pre-market as well.

The main reason Microsoft has changed strategies seems to be the overt willingness of Yahoo to do a search outsourcing deal with Google in the event Microsoft walks away or goes hostile. The threat is very real, and some experts say that regulatory approval of such a deal would not be as difficult as some have speculated.

See our interview with Citi Analyst Mark Mahaney from earlier this week.

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