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New York/San Francisco: Yahoo extended a deadline to nominate board directors, buying the company time to pursue alternatives to Microsoft's $41.7 billion offer, while also giving Yahoo room to negotiate a friendly deal with Microsoft.
The original March 14 deadline could have catapulted Microsoft and Yahoo into a formal proxy contest next week. Instead, Yahoo said on Wednesday the deadline would fall 10 days after it announces the date for its annual shareholder meeting, which has yet to be scheduled.
Yahoo has explored tie-ups with several other internet and media companies that would allow it to retain more independence.
Delaying board nominations reduces the pressure on Microsoft to turn hostile in its takeover strategy in which it could nominate an alternative slate of Yahoo directors.
Deal with AOL unit
Talks about a deal with Time Warner's AOL unit have accelerated, a person briefed on the discussions said on Wednesday. News Corp and Yahoo are still discussing possible options, a source familiar with the talks said.
A Yahoo spokeswoman declined to comment the board actions beyond its previous statement that the company and its directors are continuing to consider all strategic options.
Canaccord Adams analyst Colin Gillis said the move was a delaying tactic by Yahoo as chief executive Jerry Yang looks for an alternative to Microsoft.
Alternatives
"It's a sign he doesn't really have any viable alternatives. He's trying to buy more time to dig up other solutions," said Gillis.
Gillis said it would be best for both companies if they could work out a deal.
"Microsoft has time working against it," he said. "They don't want to spend six months doing the dance with the [Yahoo] board and 12 months waiting for a deal to close."
After more than a year of intermittent talks, Yahoo rebuffed an offer that Microsoft made public on February 1 valuing the company at $31 per share in cash and stock.
Based on current share prices, the deal would value Yahoo at $27 per share.
Yahoo shares rose two per cent to $28.62 in early trading on the Nasdaq, indicating investors still expect Microsoft to sweeten its offer.
Microsoft gained 2.6 per cent to $28.31.
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