In what could be the biggest internet deal of 2008, Microsoft announced today that it has made a formal proposal to the Board of Directors of Yahoo! Inc. to acquire all the outstanding shares of Yahoo! stock for $31 per share in a cash plus stock deal. This is effectively a 62 percent premium to Yahoo!'s current trading price.

Microsoft's objective is to entity to create a more competitive company whilst at the same time providing better value to shareholders and better choice and innovation for customers and partners. 

Steve Ballmer, CEO of Microsoft, said in a statement today: "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. We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners."