Microsoft Corp has made an unsolicited offer to buy Yahoo Inc for $44.6 billion in cash and stock, seeking to join forces against Google Inc in what would be the biggest Internet deal since the Time Warner-AOL merger.
In its boldest-ever acquisition move, Microsoft said on Friday it offered $31 per share for Yahoo, or a 62 percent premium over the Internet media company's closing stock price on Nasdaq Thursday.
Yahoo, whose shares jumped to $30.75 in premarket trading, said it would evaluate the bid.
Microsoft shares, which have a market capitalization of about $300 billion, fell 6 percent to $30.78.
Speculation over a Microsoft move on Yahoo has swirled for at least a year, as investors wondered whether the two would seek a joint stand against an ever more powerful Google.
Internet audience researcher comScore estimates Google's share of the worldwide Web search market has reached 77 percent, while Yahoo is second with 16 percent and Microsoft was a distant third with 3.7 percent.
"Microsoft's wanted to do things that could build up its online business dramatically," said Brendan Barnicle, an analyst at Pacific Crest Securities. "This is going to be a big bet for them. But I also think it's where they see the market going, so they really needed to get there.
"This is more than a shot across the bow at Google, because you put these two guys together who are basically two and three in search and makes them far more relevant," he added.