Microsoft offers to buy Yahoo for $44.6 bn

Posted by Hitarth Jani | 12:13 AM | 0 comments »

Microsoft has unveiled an audacious $44.6bn offer to buy search engine giant Yahoo! in what would be one the largest ever takeovers.

It said its offer valued Yahoo! at $31 per share, representing a 62pc premium to Yahoo!'s closing price on Wall Street last night.

Microsoft revealed the terms alongside a letter from its chief executive Steve Ballmer to the board of Yahoo!, which this week announced it was culling 1,000 jobs.

Mr Ballmer said he was confident a combination could generate $1bn in cost-savings.

In the letter Mr Ballmer writes: "In late 2006 and early 2007, we jointly explored a broad range of ways in which our two companies might work together. "These discussions were based on a vision that the online businesses of Microsoft and Yahoo! should be aligned in some way to create a more effective competitor in the online marketplace.

"We discussed a number of alternatives ranging from commercial partnerships to a merger proposal, which you rejected. While a commercial partnership may have made sense at one time, Microsoft believes that the only alternative now is the combination of Microsoft and Yahoo! that we are proposing."

Microsoft's move follows disappointing figures last night from Google, which nevertheless still dominates in search, despite attempts by Microsoft and Yahoo! to regain ground.

Emarketer estimates that Google raked in 75pc of US paid search advertising in 2007, up from 60pc in 2006. With number two Yahoo! collecting a mere 9pc share with the other search engines splitting 16pc of the pie.