CNET News.com reports that Microsoft (MSFT) and Yahoo (YHOO) are holding informal merger discussions, marking a shift from the “radio silence” that previously existed between the two companies, according to a source familiar with the talks. A lot has changed over the past two weeks, compared with February 1 when Microsoft issued its unsolicited buyout bid for Yahoo, which initially valued the company at $31 a share. “Yahoo has shown some willingness to have a conversation and talk,” said the source, who noted the Redmond giant has since come to the conclusion it may never get a formal rejection letter from Yahoo. Whether these informal talks will lead to a deal has yet to be seen, added the source.
The recent events add further clarity to comments Microsoft CEO Steve Ballmer made at CeBIT a couple weeks ago, in which he said “‘there is a range of dialogue’ for both companies about the proposed takeover,” as cited in an Associated Press report. Another source close to Microsoft’s Yahoo buyout efforts, however, cautioned that if the talks had reached a substantive level, Microsoft would have had to disclose it publicly. Representatives from both Microsoft and Yahoo declined to comment. And while the software giant could pounce and go hostile at any moment–via a proxy fight, exchange offer, or both–Microsoft-Yahoo observers should be ready to park it on a bench for a while. Microsoft has set no internal deadline of when it’s ready to say enough is enough, said the source.