Microsoft offers to buy Yahoo! for $44.6 billion

[ganeshbala]

Microsoft Corp is making an unsolicited $44.6 billion offer for Yahoo Inc., an Internet icon and one the best known Web portals, in a move to boost its competitive edge against Google Inc. in the online services market.

The unexpected announcement on Friday comes as Yahoo and Microsoft have fallen behind Google in the race to capture online advertising dollars. The deal could also give lift to the entire technology market.
The announcement sent Yahoo's share price up 54 per cent in pre-market trading.

In a letter to Yahoo's board of directors, Microsoft Chief Executive Steve Ballmer said the company will bid $31 per share, representing a 62 percent premium to Yahoo's closing stock price Thursday.
Since reaching a 52-week high of $34.08 in October, Yahoo shares have fallen 46 per cent. Yahoo climbed $10.27 to $29.45 in pre-market trading.



Ballmer said in the letter that Yahoo had told the world's biggest software company a year ago that the Yahoo board felt it was not the right time to enter into discussions regarding a deal.
''According to that letter, the principal reason for this view was the Yahoo board's confidence in the ''potential upside'' if management successfully executed on a reformulated strategy based on certain operational initiatives, such as Project Panama, and a significant organisational realignment.''


''A year has gone by, and the competitive situation has not improved,'' Ballmer added.
Under terms of the proposed deal, Yahoo shareholders could choose to receive cash or Microsoft common shares, with the total purchase consisting of 50 per cent each cash and stock.