Microsoft announced an unexpected 44.6-billion-dollar bid for Yahoo Friday, as a latest move by the software giant to challenge Google's dominance of the lucrative online search and advertising markets.(Xinhua/Reuters File Photo) Photo Gallery>>>

The Yahoo headquarters in Sunnyvale, California.(Xinhua/AFP File Photo) Photo Gallery>>>

    BEIJING, May 4 -- Microsoft Corp, closing in on the biggest acquisition in its 33-year history, may seek to end an impasse with Yahoo! Inc's board by raising its takeover offer, an insider has told Bloomberg News.

    Talks intensified during the week after Yahoo! spent three months hunting for alternatives to the deal. The original cash-and-stock bid of US$31 a share, or US$44.6 billion, has fallen to US$29.40 a share because of Microsoft's declining stock price.

    A higher offer may win over the board of Yahoo!, eliminating the need for Microsoft Chief Executive Officer Steve Ballmer to go to shareholders with a hostile offer. A deal also may halt efforts by Yahoo! to forge an online advertising partnership with rival Google Inc.

    "The impact of the decision is wide because a hostile bid is not in the interest of either Microsoft or Yahoo!," said Andy Miedler, an analyst at Edward Jones & Co in St Louis. He has a hold rating on Microsoft's shares. "It's certainly easier to raise the offer."

Microsoft Chief Executive Officer Steve Ballmer pauses as he delivers a speech in Zurich October 4, 2007. (Xinhua/Reuters Photo) Photo Gallery>>>

    Microsoft is counting on a Yahoo! marriage to help it challenge Google, the leader in the US$41 billion online advertising market. Yahoo! has the most visited United States Website and handles more Internet queries than any company besides Google.

    Yahoo! shares climbed US$1.86 to US$28.67 on Friday in Nasdaq Stock Market trading. Microsoft fell 16 US cents to US$29.24, while Google dropped US$11.79 to US$581.29.

    Yahoo! spokeswoman Diana Wong and Microsoft spokesman Frank Shaw declined to comment.

    Yahoo! CEO Jerry Yang has said Microsoft's original offer "substantially undervalues" his company. Yahoo! is worth more because of investments in Asia and its position in the Internet search market, he said. Until now, Ballmer has stood firm on the price.

    The potential Yahoo! agreement with Google may have changed his mind. Yang plans to make a deal to use ad software from Google within a week unless he agrees to sell to Microsoft, said the insider.　

    (Source: Shanghai Daily/Agencies)