Citigroup: Microsoft to increase Yahoo bid
Microsoft is poised to increase its takeover offer for search rival Yahoo, predict Citigroup.
The financial analysts believe the deal is now close to going ahead at a higher price than the original $44.6 billion bid in February.
Citigroup analyst Mark Mahaney says that an improvement on Microsoft’s initial $31 per share offer looks extremely likely.
“We believe that a Yahoo sale to Microsoft is the most likely outcome,” he said, adding “We think the strategic value of Yahoo to Microsoft is very significant,”
The importance of Yahoo’s presence in the search and online advertising markets to Microsoft’s future plans is common knowledge, with Microsoft CEO Steve Ballmer making several statements to that effect.
As Citigroup believe that Microsoft is both “capable and willing” to push the deal through, they have now increased the price target for Yahoo shares from $31 to $34 and upgraded their advice for the stock from ‘hold’ to ‘buy’.
Although there remain other possible Yahoo suitors, including Time Warner, Microsoft are leading the race and are view as the most likely to purchase Yahoo, whose shares closed at $27.52 on Monday.
However, Citigroup believe the competition could hasten an improved offer and an eventual Microsoft-Yahoo tieup.
“We believe this could serve as a forcing function to a higher Microsoft bid.” said Mahaney.
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