Although it has so far been critical of Microsoft's hostile takeover bid, Yahoo! may come round to an agreement with the software and internet giant because rival proposals cannot offer as much, it has been suggested.According to Colin Gillis of investment dealer firm Canaccord Adams, bids recently put forward by other companies would not help Yahoo! regain the lead in internet search over competitor Google, Bloomberg reports.
"All this talk about Yahoo! combining with AOL or News Corp is just noise. You're not curing any weaknesses. Shareholders would have a hard time loving a combination like that,'' Mr Gillis stated.
The Bloomberg reports goes on to say that, in securing a takeover of Yahoo!, Microsoft would more than double its share of internet searches and would save up to $1 billion a year by reducing overlap in the two firms' operations.
Meanwhile, Hamilton Faber, an analyst with Atlantic Equities, added that entering into an agreement with Time Warner-owned AOL would not provide Yahoo! shareholders the savings they would get with Microsoft.
He commented: "Time Warner may have the desire, but as far as Yahoo! shareholders are concerned, it is not the best option.
"The synergies from combining AOL and Yahoo! wouldn't be anywhere near as large as combining Microsoft and Yahoo!.''
However, in a recent letter to shareholders, Yahoo! chief executive Jerry Yang argued against a Microsoft takeover, saying the bid undervalues the company and is not in the best interests of investors.
