Microsoft offers $45 bln for Yahoo

Microsoft announced an unexpected 44.6-billion-dollar bid for Yahoo Friday, as a latest move by the software giant to challenge Google's dominance of the lucrative online search and advertising markets.

NEW YORK, Feb. 1 (Xinhua) -- Microsoft Corp. Friday announced a surprise offer to acquire Yahoo Inc. for an estimated 44.6 billion U.S. dollars, while Yahoo said it will study the proposal "carefully and promptly."

In a statement issued on its website, Microsoft said it has made a proposal to Yahoo's Board of Directors to acquire all the outstanding shares of the search company's common stock for 31 dollars a share.

The offer represents a 62 percent premium above the closing price of Yahoo common stock on Thursday.

Yahoo released a terse statement on its website Friday, saying it has received Microsoft' unsolicited proposal and that Yahoo's Board of Directors will "evaluate this proposal carefully and promptly in the context of Yahoo's strategic plans and pursue the best course of action to maximize long-term value for shareholders."

The latest move was seen as Microsoft's boldest bid to challenge Google's dominance in the online search and advertising markets.

Microsoft's proposal would allow the Yahoo shareholders to 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," Steve Ballmer, chief executive officer of Microsoft, said in a letter to Yahoo's Board of Directors.

"We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners," Ballmer said.

The online advertising market is growing at a very fast pace, from over 40 billion dollars in 2007 to nearly 80 billion dollars by 2010, Microsoft said.

"The combined assets and strong services focus of these two companies will enable us to achieve scale economics while reaching research and development critical mass to deliver innovation breakthroughs," said Kevin Johnson, president of the Platforms and Services Division of Microsoft.

"The industry will be well served by having more than one strong player, offering more value and real choice to advertisers, publishers and consumers," Johnson said.

Microsoft said the combination will create "a more efficient company with synergies in four areas: scale economics driven by audience critical mass and increased value for advertisers; combined engineering talent to accelerateinnovation; operational efficiencies through elimination of redundant cost; and the ability to innovate in emerging user experiences such as video and mobile.

It said these four areas will generate at least 1 billion dollars in annual synergy for the combined entity.

Microsoft said it believes the proposed acquisition would receive all necessary regulatory approvals and expects that the proposed transaction would be completed in the second half of 2008.

The Yahoo headquarters in Sunnyvale, California.