REDMOND, Washington - In an ambitious, but not unexpected move, Microsoft Corp. has tabled an offer of $31 per share or $44.6 billion for rival Yahoo Inc. Redmond said that its offer was a 62 percent premium over the close price of Yahoo shares on Thursday.
As expected Yahoo shares surged by 50 percent to $28.55, but Microsoft shares were trading 4 percent lower in early movements. Rumors have circulated since last year that Microsoft will buy out Yahoo to better compete with the threat posed by search engine giant Google Inc.
"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," Steven A. Ballmer, chief executive at Redmond said in a statement.
Microsoft also said that it would be in close contact with Yahoo's board as they evaluated the offer.
Reacting to the unsolicited offer, Yahoo said that it "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."
Under the terms of the deal, shareholders in yahoo can choose to receive either $31 in cash, or opt for 0.9509 of a share of the common stock
Analysts feel that a synergy of Microsoft and Yahoo businesses could be vital if the company is to exploit the online-advertising market, which is currently dominated by Google. Online-advertising is predicted to grow to $80 billion over the next three years.
