The Redmond, Washington-based software maker upped its offer beyond the original value of US$44.6 billion, or US$31 per share, according to a person familiar with the matter.

The New York Times, citing unnamed sources, reported Microsoft boosted the offer “by several dollars” per share, and  called the offer an “enormous breakthrough.”

The talks were expected to continue into the weekend. The Wall Street Journal reported meanwhile that executives from the two companies had intensified talks on the deal. But despite encouraging signs, both reports quoted sources familiar with the negotiations as saying that the talks could falter or even collapse altogether. In an intriguing twist, Microsoft Chairman Bill Gates and Yahoo President Susan Decker were both expected to be in Omaha, Nebraska, this weekend to attend Berkshire Hathaway Inc’s annual meeting.

Gates-Decker meet?

Both Mr Gates and Ms Decker are on the board of the company. The intensified talks came a day after Microsoft board gave company CEO Steve Ballmer broad authority to decide on how to proceed with the takeover attempt of Yahoo.

If the deal goes through it would easily be the largest in Microsoft’s history and would reshape the Internet landscape by giving Microsoft direct access to Yahoo’s estimated 500 million users.