Planet Lowyat

Wow! It’s been rumored for a long time -Microsoft buy Yahoo, but now it’s reality.

According to Bloomberg, Microsoft Corp., the world’s biggest software maker, made an unsolicited $44.6 billion offer for Yahoo! Inc. to challenge Google Inc.’s dominance in Internet search services and advertising announced by Microsoft CEO Steve Ballmer.

The $31-a-share bid of cash or Microsoft stock is 62 percent more than Yahoo’s closing price yesterday. Before today, Yahoo had dropped 18 percent this year in Nasdaq Stock Market trading, and this week posted a 23 percent profit decline for the fourth quarter.

Microsoft Chief Executive Officer Steve Ballmer is attempting the biggest-ever technology takeover after failing to compete with Google in a market that may almost double to $80 billion by 2010. Google has grown faster than Microsoft in every quarter since Google’s 2004 initial public offering as its search engine won more users.

“Microsoft is under massive pressure to expand its Internet business to fend off competition from rivals such as Google and this deal shows how desperate they are,” said Thomas Radinger, a fund manager at Pioneer Investments in Munich, which oversees about $95 billion, including Microsoft shares. “It’s a huge gamble as the price is very steep and it will take years to successfully integrate such a massive acquisition.”

Yahoo rose $8.58, or 45 percent, to $27.76 at 10:46 a.m. in Nasdaq trading. Microsoft, based in Redmond, Washington, fell $2.02, or 6.2 percent, to $30.58, while Google dropped 9.5 percent to $510.75.

Read more »