Blimey. Just had a call from Mel, who’s just had a text from Steve Ballmer. Microsoft are going to  buy Yahoo at $31 a share!

 This representings total equity value of approximately $44.6 billion.

 But the more important thing for all of us is that there will be two players, not three.

So I heard the news at 12:08 GMT - I guess it’s been up for 8:00 minutes. Full release from Microsoft here: Mircosoft to buy Yahoo.

 Added:

OK - Picking up the comments and listing them here… So refresh the page if you want a bit more.

• Danny’s just repeated the press release at the moment.
• Reuters has some commentary which includes some comments from Steve Ballmer and says Yahoo’s share price is rising to $29.50 a share pre-trading.
• Domprofessor adds that Google’s share price has been falling over recent days after forecasts were short.
•  The Times got it online about 40 minutes ago.
• Daily Telegraph are calling it “Audacious” (I disagree)

The Telegraph also reveals that they loked at other ways of collaborating, quoting a letter: “In late 2006 and early 2007, we jointly explored a broad range of ways in which our two companies might work together” suggesting that they had already decided between them that they couldn’t take on Google alone.

• Fox points out that this will be one of the largets Tech acquisitions ever - and way bigger than anything Microsoft have done before (AQuantive was $6Billion)
• Search Engine Watch has a huge amount of cut and paste, including the whole letter from Steve Ballmer to the Yahoo Board (Nice scoop SEW)
• BBC are all over it too.

What do Microsoft People think about it? well Mel has put his thoughts up now (rushing to a plane) which sounds positive, but I picked up on my Facebook about an hour before the news broke the Eytan Seidman, one if the biggest names from the algo side of Microsoft is moving on. No idea where to, but maybe he knew what was in the wind and thinks Yahoo’s organic algo will take the high ground.

Other blogger thoughts…

• Dave Naylor points out that an offer does not mean it will happen. he wonders if Google will step in. I doubt Google would get it past the authorities though.
• Andy Beal reckons that the takeover’s going to get hostile very quickly.
• Sphinn has just nuked most of the other bloggers in favour this one (So - I’ve just deleted my Sphinn button.)