Yahoo shares rise as investors anticipate deal
NEW YORK—Yahoo Inc.'s shares rose Friday in what an analyst attributed to investors' expectations that the company will eventually agree to be purchased by suitor Microsoft Corp., perhaps at a higher price than the software company is currently offering.
Yahoo shares rose $1.86, or 6.9 percent, to finish trading at $28.67. In the past year, the stock has traded between $18.58 and $34.08.
"I think what the market is indicating is the chance of a deal getting done at a higher price, maybe not a much higher price, but maybe an all cash deal of (between $31 and $33 per share) -- that's more likely today than it was yesterday," Cowen and Co. analyst Jim Friedland said in a phone interview.
Microsoft's bid for Yahoo is currently worth about $42.4 billion, or $29.48 per share, based on Microsoft's closing stock price Thursday. Yahoo has rejected the bid, saying it undervalues the Internet icon.
A Friday afternoon report from the Wall Street Journal indicated Friday that talks between the companies have intensified as they try to reach an amicable deal. Earlier Friday, the newspaper reported that Microsoft may be preparing to go straight to Yahoo's shareholders, perhaps as soon as that day.
The Journal also reported that, impressed by a two-week test completed last month, Yahoo could reach a long-term advertising partnership with Google Inc. within a week.
Friedland said that media reports offer a sort of "real-time insight into the negotiations, with each side clearly leaking bits and pieces of information to try to trigger a response from the other side."
"Today the winds are blowing in the direction that in order to get a deal done Microsoft may be willing to pay a little more. By the end of the day today, we might be going in the other direction again," he said.
