Microsoft has made a surprise $44.6 billion offer to buy Yahoo at $31 per share share.
Yahoo issued a statement saying they would consider the offer. Yahoo said that its board "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."
Microsoft CEO Steve Ballmer said they could help Yahoo compete: "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,"
Yahoo recently laid off over 1,000 employees. They are a great company with numerous online products including several recently purchased social media sites like Blo.gs and del.icio.us. They also have a significant media side with original content and acquisitions like Rivals.com. It will be interesting to see whether Microsoft can convince Yahoo shareolders that this is the best option for them or whether Yahoo shareholders believe the company can do better by staying independent.
Yahoo's shares (YHOO) are up over 44% on news of the deal reports Marketwatch.
Google shares are down significantly on the news because of concerns that a Microsoft-Yahoo merger could threaten Google's search and online advertising dominance.
Microsoft views Yahoo as its best chance to thwart Google, which has leveraged its leadership in Internet search and advertising to emerge as an increasingly serious threat to the world's largest software maker's persuasive influence on how people interact with computers.
Google already controls nearly 60 percent of the U.S. search market, and has been widening its lead, despite concerted efforts by both second-place Yahoo and third-place Microsoft. By combining, Microsoft and Yahoo would have a 33 percent share of the U.S. search market, according to the latest data from comScore Media Metrix.
By joining forces, Microsoft and Yahoo also would widen their narrowing advantage over Google in providing free e-mail accounts -- a service that helps foster more loyalty with users and create more advertising opportunities.
Google shares (GOOG) are down 9% on the news in early trading today.
Microsoft has made a surprise 