Microsoft makes $44.6B bid for Yahoo

Under the proposed deal, Microsoft would acquire all the outstanding shares of Yahoo common stock for $31 per share, representing a 62 percent premium above the closing price on those shares on Thursday.

According to a statement issued by the Redmond, Wash.-based software giant, Yahoo shareholders could elect to receive cash or a fixed number of shares of Microsoft common stock, with the total consideration payable to Yahoo shareholders consisting of one-half cash and one-half Microsoft common stock.

"We have great respect for Yahoo!, and together we can offer an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market," said Microsoft chief executive Steve Ballmer. "We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners."

In a letter to Yahoo's Board of Directors also published on Friday, Ballmer revealed that Microsoft approached Yahoo in late 2006 to explore ways the two firms could align to create a more effective competitor to dominate forces such as Google. The offer, which also included talk of a possible acquisition, was rebuffed.

In a written response to that offer sent last February, Yahoo's Board is said to have expressed confidence in a turnaround strategy and a significant organizational realignment, arguing that it was the wrong time for its shareholders to enter into discussions regarding an acquisition transaction.

"A year has gone by, and the competitive situation has not improved," Ballmer wrote in his latest letter.

"Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition," he added. "Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers, and publishers."