"Everybody -- shareholders, management alike -- is getting more reasonable. All of a sudden it seems like something is going to happen," the newspaper quoted a source as saying.
"It has been a foregone conclusion on Wall Street that this is a deal that is going to get done," analyst Anthony Valencia of Trust Co of the West, which owns Yahoo shares, told the Los Angeles Times. "While there have been some delays, it's clear that the parties are moving closer and closer together."
Microsoft hopes a takeover of Yahoo! would put it in a better position to compete against Google in the Internet search and advertising arena.
However, sources also said that the talks could still fall apart and Yahoo! plans to continue negotiating an alternative arrangement with Time Warner Inc that would provide the Internet major with cash investment in exchange for a 20-per cent stake in the combined AOL-Yahoo! business. Both Microsoft and Yahoo! declined to comment.
Despite threatening Yahoo! with a hostile takeover unless it accepted the unsolicited $31 per share offer in cash and stock, Microsoft is reported to have opted for a friendly deal and sweetened its offer by several billion dollars.
Yahoo! declined the offer of $44.6 billion, saying it was low. The bid value has since declined with a fall in Microsoft shares and is now valued at about $ 42 billion.
Yahoo! CEO Jerry Yang had maintained he was not opposed to combining forces as long as Microsoft raised its bid. Yahoo! executives had floated a figure of $40 a share.
