All Things Digital

If this Yahoo-Microsoft deal debacle becomes any more ludicrous, NBC will be able to use it as a plot line in the next season of “The Office.”

First Yahoo (YHOO) insiders claim that the company didn’t know Microsoft had raised its bid for the company to $33-per-share. And now Yahoo CEO Jerry Yang is telling anyone who will listen that Yahoo remains open to a deal with Microsoft. “If they have anything new to say, we would be open,” Yang told Reuters. “I am more than willing to listen. There are some that are disappointed that a deal was not reached and there are others that are probably pleased we didn’t do the deal at $33. The bottom line is we went in there to have honest and good-faith negotiations and they walked away. We didn’t walk away.”

Yang gave a similar story to the New York Times, again blaming Microsoft (MSFT) for the failed negotiations. “They chose to walk away after we put a price on the table, and they didn’t want to negotiate,” he said of Microsoft. “From my perspective, we were open all along to selling to Microsoft. We just feel Yahoo, either standalone or with Microsoft, is worth more than what they put on the table.”

Yang’s account, of course, conflicts with that of Microsoft and its CEO Steve Ballmer, who insist the software giant attempted to negotiate in good faith and Yahoo settled on a price of $37 a share and ultimately refused to budge.

Get this. Yahoo (YHOO) didn’t accept Microsoft’s (MSFT) offer of $33-per-share, because it didn’t know Microsoft had offered $33-per-share. This according to people close to Yahoo, who claim that Yahoo only learned Microsoft was willing to raise its bid in Microsoft CEO Steve Ballmer’s kiss-off letter to Yahoo CEO Jerry Yang. “We did not know what the offer was,” said one.

Meanwhile, another source close to Yahoo claims Microsoft has mischaracterized the negotiations between the two companies. “It is simply factually incorrect to make it seem as though we weren’t actively engaged in robust negotiations,” he told CNBC, stressing that Yahoo had embraced its fiduciary responsibilities, not shirked them as Microsoft would suggest. “Microsoft is lying,” he said. “How much communication do they want? They were upset because we wouldn’t accept a low-ball bid.”

But perhaps not as upset as Yahoo shareholders may be having just watched $14 billion evaporate into thin air because the company’s board suddenly claims not to have known what Microsoft’s offer was. You can almost hear the shareholder lawsuits being written. Said Stuart Grant, managing director at Grant & Eisenhofer, a law firm that specializes in bringing investor lawsuits: “I think it’s pretty hard for the Yahoo board to turn down $33 when they’ve shown no ability to turn around their stock price. There’s going to be breach-of-fiduciary-duty lawsuits, and I must tell you they are looking pretty good right now.”