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After a months-long standoff, Microsoft and Yahoo are now engaged in active merger talks, people involved in the discussions said Friday.
Microsoft, which had threatened to abandon its bid, has increased its offer “by several dollars” per share, one of those involved said.
A deal, however, was not close Friday night, these people said.
The merger talks represent an enormous breakthrough after weeks of behind-the-scenes discussions without any progress. The exact terms being discussed could not be learned.
The talks would explain the public silence from Microsoft this week. It has refused to disclose its plans, despite its earlier threat to start a proxy contest if Yahoo did not reach a deal with it by last Saturday.
A person involved in the talks cautioned that they could still be postponed or collapse entirely.
Shares of Yahoo rallied on news of the renewed talks. They closed at $28.67, up $1.86, or almost 7 percent. Microsoft shares edged down slightly.
Some Yahoo shareholders said that the flurry of phone calls they are receiving from both Yahoo and Microsoft has intensified. The two companies have been trying to find out what price large shareholders would find acceptable.
In recent days, Microsoft has privately raised the possibility of increasing its offer, currently valued at about $29.30 a share, to as much as $33.
Some shareholders have signaled they are holding out for more than $35. One shareholder said he believed an offer of $34 would probably be sufficient to consummate a deal.
Microsoft and Yahoo declined to comment.
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