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SAN FRANCISCO - Senior executives from Microsoft and Yahoo have already me to discuss Microsoft's takeover bid for the company, according to two people familiar with the matter.
The meeting was said to be the first since Microsoft made its unsolicited offer for Yahoo, worth nearly $42
billion, on January 31. Yahoo rejected the offer as inadequate last month.
The meeting was not a negotiation and no bankers were present, said one of the sources, who was not authorised to speak about the matter and thus wanted to remain anonymous.
The meeting with Microsoft is part of the company's strategy to keep all its options open, the people familiar with the matter said.
Yahoo has held talks with News Corp and Time Warner's AOL, other sources revealed.
The session was intended to allow Microsoft to present its vision of a combined company, and Yahoo executives mostly listened, said the Wall Street Journal, which first reported the news, citing a person familiar with the matter.
Financial terms were not discussed and it was unclear which executives took part, the Journal said.
Microsoft and Yahoo spokesmen declined to comment.
The meeting represents a "solid move, heading into the inevitable," said The 451 Group analyst Brenon Daly, referring to a consensus that a deal between the two companies will happen.
"My read on it is that it's a good-faith effort on both sides to begin the process of sorting through really thorny personal questions" such as how to divide talent and how to work with counterparts in case of a merger, he said.
Since Yahoo rejected Microsoft's offer last month, no other bids have been made public nor has Microsoft sweetened its bid, leaving the two companies in a stalemate.
Yahoo recently extended the deadline for nominations to its board of directors in an effort seen by analysts and investors as forestalling a potential hostile effort by Microsoft.
Microsoft had originally proposed to pay nearly US$45 billion for Yahoo, but the value of its offer has since declined to less than $42 billion as its shares have fallen 12 per cent.
Microsoft shares were down 61 cents, or 2.1 per cent, at $28.05 in Friday afternoon trade on the Nasdaq, and Yahoo shares were down 72 cents, or 2.6 per cent, at $26.78.
News Corp Chief Executive Rupert Murdoch has said he would not fight Microsoft for a Yahoo deal.
AOL last Thursday said it was buying the social networking site Bebo, in a move that some say signals that its parent, Time Warner, has plans that do not involve Yahoo.
- REUTERS
