Yahoo is trying to fend off the Microsoft deal as more players enter the picture

Microsoft is playing hardball in their bid to acquire Yahoo, issuing an ultimatum and threatening to take the $31 per share offer directly to stockholders. Microsoft may have some help in their efforts, as News.com has offered to join forces with Microsoft in order to make the acquisition happen, though talks between Microsoft and News.com were reported to be in the very early stages.

Microsoft Gives Yahoo Ultimatum on Buyout Offer (Baseline Mag)

News Corp Talking To Microsoft About Joining Yahoo Bid (Tech Crunch)

These new developments come as Yahoo appears to be scrambling to try anything to avoid a takeover by the Redmond-based giant. One rumor is that Yahoo is negotiating with AOL for a deal combining the two companies’ Internet businesses. Yahoo also announced a deal with Google to test Yahoo’s use of the Google AdSense program to deliver paid advertisements along with Yahoo’s search results. Another tactic Yahoo might engage in is buying back its own shares, which would probably raise the stock price in advance of a hostile takeover attempt and would also give Yahoo more voting shares should a proxy battle break out.

Yahoo rumored to be in AOL talks (News.com)

Yahoo to try using Google for search ads (News.com)

It seems like the whole Microsoft/Yahoo deal has become a soap opera, with drama and strange relationships all around. It wasn’t too long ago that a Yahoo/Google ad placement deal would have been unthinkable, as would a merger of Yahoo and AOL. I almost want to pop a bag of popcorn, pull up a chair, and watch the drama unfold. How do you think this situation will shake out?