Video

Microsoft made an unsolicited bid for Yahoo. The software giant's nearly 45 billion dollar offer in cash and stock would be the biggest Internet deal in eight years. The 31 dollar a share offer amounts to a huge 62 percent premium. Microsoft's move is clearly aimed at challenging its archrival, Google, which dominates the market for online search. In a statement, Microsoft CEO Steve Ballmer said, "We have great respect for Yahoo! .... We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners." Jupiter Research analyst Bobby Tulsiani: "In a word, Google. They've been a laggard in search. This is a good way to catch up. Yahoo has 20% search. Google has 50% search. Combine Microsoft and Yahoo and you get closer to catching up to Google. If you can't find the audience, buy the audience. That's the major reason." Yahoo says it will promptly evaluate the offer. A deal would combine the second and third largest players in online search. What's more, Yahoo is the most visited website in the world. It runs the world's largest email service for consumers and the popular Flickr photosharing site. Analysts say Microsoft is making the move because it has been unsuccessful in luring users to its site, MSN. In its letter to Yahoo, Microsoft disclosed that it had been talking to Yahoo about working together since 2006 and that Yahoo had rejected the idea of being taken over last year. In morning trading, Yahoo's share jumped as high as 55 percent to 29.83 but remained under the offer price of 31 dollars. Microsoft and Google traded lower. Fred Katayama, Reuters, New York.