Microsoft Corp. made a move on Friday to bolster its Web operations against Internet search leader Google by making an unsolicited offer for portal and search engine Yahoo, Inc. worth $31 per share, or $44.6 billion.

Yahoo! shares rose 58.5 percent, or $11.22 to $30.40 in pre-market trading. Shares of Microsoft fell $1.85, or 5.67 percent to $30.75.

The offer is a 62 percent premium over Yahoo's closing price yesterday on the Nasdaq Stock Market. Microsoft said Yahoo's shareholders could elect to receive up to one-half cash and one-half Microsoft common stock.

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, said Steve Ballmer, chief executive officer of Microsoft. We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners.

Microsoft's chief software architect Razy Ozzie said the combination of the companies would enable us to jointly deliver a broad range of new experiences to our customers that neither of us would have achieved on our own.

Microsoft cited the fast growing online advertising market which is expected to increase from $40 billion in 2007 to $80 billion by 2010.

Today this market is increasingly dominated by one player, the company said in statement. Together, Microsoft and Yahoo! can offer a competitive choice while better fulfilling the needs of customers and partners.

Microsoft said it expects $1 billion in synergies for the combined company occurring in scale of economies for audience and advertisers, engineering talent, operational efficiencies by reducing redundancies, innovation in video and mobile technologies.

Microsoft said it would offer significant packages to retain Yahoo engineers, key leaders and other employees. It expects that the deal could be completed by the second half of 2008.