In a move that lots of people did see coming, the BBC reports today that Microsoft has offered $45bn to buy Yahoo. The price represents a 64% mark-up on Yahoo’s current share price and comes at a time when the company is seriously struggling. Profits for the Oct-Dec 2007 quarter were down 23%, former chief executive Terry Semel, has now quit as non-exec chairman, and the company this week announced plans to lay-off 1,000 staff in a bid to bet back to profitability.

It seems pretty certain that Yahoo’s co-founder and chief-executive, Jerry Yang, would be against any sale, but as directors of a publicly listed company, they have a legal obligation to act in the best interests of stock holders, even if that means selling to their second biggest competitor.

It’s unlikely that Microsoft will be the only bidder, however. Expect News Corp, AOL Time Warner and one or two others to throw their hat in the ring.

Update: The Guardian has published Microsoft’s letter to the Yahoo board in full. Microsoft seems to be indicating that it was interested in a merger last year and Yahoo’s board indicated that it saw the benefits too, but that MS is tired of waiting and so has made a bid for the company instead.

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