Yahoo!'s board is set to turn back Microsoft's offer of $31 per share, claiming the offer is too low to buy the company. Speculation on the street is Yahoo is angling for a bid of around $40, and then maybe settling somewhere in between. Citigroup thought the $31 per share offer was "fair" and not a low ball offer.

Keep in mind that a bid of $40 would make the deal worth $51.1 billion, putting it at Yahoo's stock price of over two years ago. Between recapturing the stock value that's been lost, and lining up with Microsoft rather than going at it alone against Google, this has got to be a deal Yahoo would jump at. I've got to believe shareholders would love take a half cash half stock deal rather than watch Google further erode Yahoo's stock price and competitive position.

Will Microsoft sweeten up the offer? Will it be somewhere near the $35 to $40 per share range Google would really like to have? This is becoming almost as exciting as the Clinton / Obama primary race. Stay tuned.