Microsoft bids £22.4bn for Yahoo!

Combined business seen as better able to compete with Google for online advertising

Microsoft has offered to buy Yahoo! for $44.6bn (£22.41bn) in an apparent bid to strengthen its hand against Google for the growing online advertising market.

The cash and shares offer prices Yahoo! 62 per cent above its common-stock price at the time of the bid. Yahoo! prices subsequently soared following the news.

Steve Ballmer, chief executive officer of Microsoft, said: “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."

Ray Ozzie, chief software architect at Microsoft, said: “Yahoo! has played a pioneering role by building compelling, high-scale services and infrastructure.

"The combination of these two great teams 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.”