The offer was made by Microsoft chief executive Steve Ballmer in a letter to Yahoo's board of directors.
"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," wrote Ballmer.
Yahoo has been one of Microsoft's closest competitors in the search engine space, but both are completely overshadowed by Google.
Although the combined power of Microsoft and Yahoo would not overtake that of Google's, the acquisition would provide both companies with a lot more clout.
The offer allows Yahoo to receive cash or a fixed number of shares of Microsoft common stock. Yahoo shareholders would get one half cash and one half Microsoft common stock.
Should Yahoo agree to the deal, Microsoft expects that the acquisition would be completed in the second half of 2008, pending all necessary regulatory approvals.
Microsoft offers US$44 billion for Yahoo
Staff Writer on Feb 2, 2008 1:36PM