Gasta News: Microsoft to buy Yahoo for $44.6bn (£22.4bn)

Microsoft has offered to buy the search engine company Yahoo for $44.6bn (£22.4bn) in cash and shares.

The offer, contained in a letter to Yahoo's board, is 62% above Yahoo's closing share price on Thursday.

Yahoo cut its revenue forecasts earlier this week and said it would have to spend an additional $300m this year trying to revive the company.

It has been struggling in recent years to compete with Google, which has also been a competitor to Microsoft.

"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," Microsoft chief executive Steve Ballmer said.

Chairman quit

There has not yet been any comment from Yahoo.

Its chief executive, Jerry Yang, announced on Tuesday that he intended to lay off 1,000 staff as part of a restructuring plan.

Terry Semel, who stepped down as chief executive last June, also quit as non-executive chairman on Thursday.

Microsoft said that Yahoo shareholders could choose to receive either cash or shares.

Yahoo shares have fallen 46% since reaching a year-high of $34.08 in October. They rose 54% in pre-market trading.

"Ultimately this corporate marriage was forced by the rise of Google, which has grown into a serious competitor for both Microsoft as a software company and Yahoo as an internet portal," said Tim Weber, business editor of the BBC News website.

"It is a shotgun marriage, but the person holding the shotgun is Google."

'Exorbitant premium'

According to its letter to Yahoo, Microsoft attempted to enter talks about a deal a year ago, but was rebuffed because Yahoo was confident about the "potential upside" presented by the reorganisation and operational activities that were being put in place at the time.

"A year has gone by, and the competitive situation has not improved," Microsoft's letter said.

But there has been some concern about the price that Microsoft is offering.

"To me, the premium seems exorbitant, for what is a dwindling business," said Tim Smalls from the brokerage firm Execution LLC.

"I personally don't see how the synergies of Microsoft-Yahoo is going to take on Google."

Other analysts were more enthusiastic about the offer.

"It is a fantastic offer. It is game on," said Colin Gillis from Canaccord Adams.

"This consolidates the marketplace down to Google versus Microsoft. These two companies will be going head to head."

Gasta & Baidu.com Inc

This is the latest search engine reach report from Gasta news, Baidu the robot that crawls gasta in eastern europe for results is growing at a phenomenal rate, as is the China net market.

SHANGHAI (Reuters) - Baidu.com Inc led China's search engine market in last year's fourth quarter with a 60.1 percent share, research firm Analysys International said on Friday.

Google Inc came second with a 25.9 percent share, followed by Yahoo China with 9.6 percent, it said in a statement.

Baidu's fourth-quarter market share was roughly unchanged from the previous quarter. Google Inc, meanwhile, gained 2.2 percent in the fourth quarter from the third, and has launched a mobile short message search service.

China's search engine market reached 946.6 million yuan ($131.3 million) in the fourth quarter -- almost double from a year earlier -- and was dominated by Baidu, Google and Yahoo China with a combined share of nearly 96 percent.

China had 210 million Internet users at the end of 2007, second only to the United States, and the population would become the world's largest at the beginning of this year, Xinhua news agency said this month.