Microsoft Makes $44.6 Billion Offer for Yahoo

Authored by Mark Hefflinger on February 1, 2008 - 5:30am.

Sunnyvale, Calif. - In a bold move that sent ripples through Silicon Valley before sunrise on Friday, Microsoft (NASD: MSFT) said that it has launched an unsolicited $44.6 billion takeover bid for Yahoo (NASD: YHOO). The deal, which would give Yahoo's shareholders the option of taking $31 a share in cash or an equal amount of Microsoft stock, represents Microsoft's stiffest challenge yet to Google (NASD: GOOG) in the online advertising market.

In a brief statement, Yahoo responded by saying that its board of directors will evaluate the offer "carefully and promptly."

"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 Steve Ballmer, the CEO of Microsoft.

Ray Ozzie, Microsoft's chief software architect, added that a combination "would enable us to jointly deliver a broad range of new experiences to our customers that neither of us would have achieved on our own."

Microsoft said that it plans to offer "significant retention packages" to Yahoo's engineers, key leaders and employees, and said that a deal could potentially be completed by the second half of this year.

If completed the combination would be the largest in the technology sector since the merger of AOL and Time Warner in 2001.