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Microsoft said it had offered to buy Yahoo for $31 per share, which
it said represented a 62 percent premium above the company’s closing
stock price on Nasdaq on Thursday.

"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," Microsoft Chief Executive Steve Ballmer said in a
statement.

Yahoo was not immediately available for comment.

Microsoft said it had identified four areas that would generate at least $1 billion in annual synergies for the combined entity.

Yahoo shares rose 56 percent to $29.95 in premarket trading on
Friday following the announcement. U.S. stock index futures also jumped
after the news was released.

(Reporting by Franklin Paul; Editing by Lisa Von Ahn)

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