Abuja — Information technology giant Microsoft has made what software analysts have described as a 'hostile takeover', when it bid to buy search engine company Yahoo for $44.6 billion (about £22.4 billion) in cash and shares.

The above amount, which is seen to be so attractive that the investors of Yahoo are expected to find it difficult to turn down, represents 62 per cent premium on share price from Yahoo's closing price last Thursday.

Yahoo is said to have acknowledged receipt of the offer, which is worth $31 a share, in a letter to its board, adding that the board would evaluate the proposal 'carefully and promptly'.

"We have received an unsolicited offer from Microsoft, but the board will carefully and promptly evaluate the proposal in the context of Yahoo's strategic plans, and pursue the best course of action to maximise long-term value for shareholders," the letter read.

The software giant has been struggling recently to shrug off stiff competition from Google, which is also a competitor to Microsoft.

Earlier this week, it cut its revenue forecast, saying that it would have to spend an additional $300 million in the current year in an effort to revive the company.

Microsoft has monitored Yahoo's struggle closely, seen the writing on the wall, and wrote in a statement that the offer will allow Yahoo shareholders to elect to receive cash or a fixed number of shares of Microsoft common stock, with the software giant's offer consisting of one-half cash and one-half Microsoft common stock.

Microsoft and Yahoo have both fallen far behind rival Google in the lucrative field of internet search, and Microsoft's Kevin Johnson believes that the combination with Yahoo would create an entity that could better Google.

"Today, the market is increasingly dominated by one player," he said, referring to Web search leader Google.

"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," Steve Ballmer, Microsoft chief executive, was quoted as saying in a statement.

Disclosing that Microsoft had sent a letter to Yahoo's directors in which it had explored a possible Microsoft-Yahoo deal last year, but was rebuffed by Yahoo which said then that it was confident of a potential upside from the operational changes it had planned, Ballmer said: "A year has gone by, and the competitive situation has not improved."

Analysts hold the view that should Yahoo say yes to Microsoft's proposal, it would not only be a 'shotgun marriage' only Google would be holding, but would also be an admission that its attempts to turn around the company has failed.

There is also the knock for Microsoft that the offer is an admission that its management is scared by the success of Google, and that its attempts to become a dominant internet content provider have failed as well.

For analysts, the promise of offering "a competitive choice" with Yahoo would be true if only the combined companies can do what they did not achieve as separate companies, namely develop search algorithms that rival those of Google.