Click here to read Microsoft's statement to the Yahoo! board

Microsoft has tabled a $44.6 billion cash and share bid to buy Yahoo! in what would be one of the biggest takeovers in American corporate history.

Yahoo!'s shares surged 48.75 per cent to $28.53 as trading commenced on Nasdaq after Microsoft announced the terms of the proposed acquisition and said that it was confident of delivering up to $1 billion in cost-savings. Shares closed up 47.24 per cent at 28.24 per cent.

It is understood that the software giant approached Yahoo! late last night with a friendly deal. Microsoft's shares fell by 6.78 per cent closing at $30.39.

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In a statement, the company said: "Yahoo! today said that it has received an unsolicited proposal from Microsoft to acquire the company.

"The company said that its board of directors will evaluate this proposal carefully and promptly in the context of Yahoo!'s strategic plans and pursue the best course of action to maximize long-term value for shareholders." A spokesman for Google said that it would be "premature" for it to comment on the proposed takeover.

The move comes just hours after Microsoft was said to have approached Yahoo! about opening negotiations for a “friendly takeover”. Morgan Stanley is advising the US computer giant.

A deal would mark one of the largest takeovers in American corporate history, and the largest in the technology sector. However, a tie-up co-incides with fears that search engines are beginning to feel the pressure from a slowing economy after Google, the market leader, missed its full-year sales and profits forecasts last night.

While Google generated $16.6 billion in revenue during the full-year, the company generates most of its money through 'clicks' on clients' advertising and the clicks reached 30 per cent in the fourth quarter, against the 50 per cent average in previous periods. Google's shares continued to fall today, losing a further 5.23 per cent at $534.79 after $11 billion was wiped off its market value yesterday.

Microsoft said that its offer valued Yahoo! at $31 per share and was a 62 per cent premium to Yahoo!'s closing price on Wall Street last night.

Steve Ballmer, the chief executive 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, the chief software architect at Microsoft, added: "Our lives, our businesses and even our society have been transformed by the Web, and Yahoo! has played a pioneering role by building compelling, high-scale services and infrastructure."

The US Justice Department said it is "interested" in reviewing any antitrust issues associated with Microsoft's bid. If the deal goes through, analysts expect scrutiny from Congress, Justice and other enforcement agencies, but that concerns about search engine or online advertising market power may not be significant enough to stop the transaction.

Earlier this week Yahoo! announced its biggest round of job cuts — 1,000 — since the dot-com crash.

Microsoft said that the deal would create a more efficient company and one better placed to generate higher online advertising revenues and provide better "user experiences" in video and mobile.

The group added that it did not believe there would be major regulatory hurdles.

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