As competition on the online services market increased over the last years, rumors about secret talks between Microsoft and Yahoo have started to appear, first two years ago, than in May last year, and now they’ve re-emerged. Up until now, confirmations of a Microsoft offer for Yahoo were never made public, but Microsoft Chief Executive Steve Ballmer finally assumed the ‘guilt’.

“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,” Ballmer said in a statement. “We believe our combination will deliver superior value to our respective shareholders and better choice and innovation to our customers and industry partners.”

This time it was a $44.6 billion offer from Microsoft, 62 percent premium above Yahoo’s closing stock price on Thursday, unconfirmed by Yahoo representatives. Both Yahoo and Microsoft have had to sit aside and watch Google take over the top spot as most popular search engine. Separate efforts have been in vain so far… Could a merge do the trick and overturn Google’s reign?

Yahoo is currently struggling with a significant drop in share values, and even took into consideration cutting 1,000 jobs by February this year. It hasn’t been the best end of year for Yahoo, as sales have dropped 23 percent in the fourth quarter, which ended December 31. One smart solution to revive Yahoo was combining the search engine with online advertising, which gave yahoo a glimpse of hope for the year to come.

A clear reaction to Microsoft’s offer remains to be seen, but Yahoo might want to take it into consideration, after the company shares have reached the lowest level in three years. If things are to go as planned, Microsoft believes the merge could finalize by the second half of 2008, and is convinced that the investment will save both partners $1 billion annually.