OK, the blogosphere is ablaze in the news of this bid by Microsoft to buy Yahoo. So, I guess I’ll pile on and bring you the news, too.

Yep, it is true. Microsoft is bidding to purchase Yahoo for $31 per share, or $44.6 billion, according to the press release by Microsoft. The per-share offer gives each share a 62% premium over the closing price of Yahoo stock yesterday.

Steve Ballmer said in his offer letter to the Yahoo! board yesterday:

“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.”

Let me translate for you:

“Google is kicking our ass and, if we’re going to have a snowball’s chance in hell of competing with them, we should work together.”

This is surely to get the attention of regulatory agencies if Yahoo accepts the offer. But, I think Microsoft is already anticipating that. The press release says:

“Today this market is increasingly dominated by one player. Together, Microsoft and Yahoo! can offer a competitive choice while better fulfilling the needs of customers and partners.”

Translation:

“Google is kicking our ass and the government would be stupid to turn us down because Google has an unfair advantage. Not to mention that, if we don’t buy Yahoo, Google will.”

What’s interesting, too, is that Ballmer’s letter to Yahoo specifically mentions a previous, private offer to buy Yahoo which the Yahoo board or directors rejected. In marked contrast, this offer is very, very public. What does this mean? It basically amounts to a hostile takeover of Yahoo. As a corporation, Yahoo’s primary responsibility is to the shareholder. With Microsoft going public and saying they’re offering a 62% premium on the stock price, all of Yahoo’s shareholders are readily aware of this offer now. This forces Yahoo’s board to consider the offer.

And they are, announcing they will consider the offer.

Should this merger go though, it will probably prove to be a colossal pain in the butt. But, with Yahoo shares falling in value, this certainly is a bold move by Microsoft in an obvious attempt to form some stiff competition to Google.

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