Citigroup Hears a Microhoo

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crystal-ball.jpgADOTAS – Citigroup says Microsoft Corp. will likely raise its $31-per-share offer for Yahoo Inc., according to reports. Microsoft and Yahoo met earlier this month to discuss the potential merger, but no progress was reported.

Citigroup analyst Mark Mahaney raisedYahoo’s price target to $34 explaining that Microsoft is so committed to buying the company, it will likely boost its bid to seal the deal.

“We believe the likelihood of Microsoft of walking away from the deal is small,” Mahaney said in a research note.

The stock-and-cash proposal value to Yahoo’s shareholders has plummeted in the wake of a 10% drop in Microsoft’s stock since the unsolicited bid was unveiled on January 31.

“While we continue to see no other competing bidders, we believe Yahoo is aggressively pursuing strategic alternatives,” analyst Mahaney reportedly told clients.

Yahoo held possible merger talks with AOL and News Corp., but the discussions never went further than initial chats. Rupert Muroch told investors at an annual media conference that News Corp. would not “get into a fight” with Microsoft for the company and its talks with AOL have reportedly fizzled as well.

Yahoo’s stock was up 3.02% today to $28.35.

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