Microsoft will in all likelihood in the next few weeks up its initial offer of $44,6-billion for Yahoo if a Citigroup analyst is to be believed.
Computerworld quotes Citigroup investment research analyst, Mark Mahaney as saying in a research note: "We believe that a Yahoo sale to Microsoft – at a price higher than the initial $31 [per share] bid – is the most likely outcome."
His belief that a higher Microsoft offer is in the offing is reflected in the fact that Citigroup has raised its price target on Yahoo shares from $31 to $34.
Mahaney says Microsoft will continue to pursue Yahoo because it is the only way it can make significant inroads into online advertising and take on rivals such as Google. "We think the strategic value of Yahoo to Microsoft is very significant," Mahaney says.
The only way Microsoft could compete with Google would be to acquire Yahoo, Mahaney is quoted as saying.
He adds that the limited combined market share of the two companies would ensure approval of the deal from US government regulators