Microsoft said on Friday it had offered to buy search engine group Yahoo for $44.6bn as the software giant seeks to catch up with arch-rival Google.

The unsolicited cash and shares deal is pitched at $31 a share, a 62 per cent premium to Yahoo’s closing share price on Thursday. Shares in Yahoo jumped 53 per cent to $29.13 in pre-market trading.

Steve Ballmer, Microsoft chief executive, said: “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.

“We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners.”

Yahoo’s shares slid this week after it issued a downbeat outlook for this year reflecting its struggles to revamp its core online services. The decline took the total fall since an October high to 45 per cent and pointed to Wall Street’s growing doubts that co-founder Jerry Yang, who stepped into the chief executive chair last year, can revive the fortunes of one of the brightest stars of the internet’s first decade.