It's been rumored to be in the works for a while.  Now, it' official, according to the BBC : Microsoft offered $44 billion in cash and stocks for Yahoo!.  Microsoft's Kevin Johnson indicated in a conference call that the combined entity would be better able to compete with Google.  Yahoo! was forced earlier this week to cut revenue forecasts, and indicated that it would have to spend as much as $300 million to revive the company, and lay off as many as 1,000 workers.

The unsolicited offer from Microsoft has been confirmed by Yahoo!.  However, it is likely to face government scrutiny for competition requirements. 

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