Microsoft Corp offered to buy Yahoo Inc for $44.6 billion, in an ambitious bid to transform two ailing internet businesses into a worthy competitor for market leader Google Inc.

The arch-rival, Google Inc fired back on Sunday at Microsoft Corp's bold bid to acquire Yahoo Inc, accusing Microsoft of seeking to extend its computer software monopoly deeper into the Internet realm.

Microsoft Chief Executive Steve Ballmer sent a letter to Yahoo's board on Jan 31 to offer $ 31 per share in cash and stock. The price is a 62 percent premium over Yahoo's Thursday close, but only about a quarter of what the Internet company was worth at the height of the dotcom bubble in 2000.

Many critics also say that the two companies have too many overlapping businesses—from instant messaging to email and advertising, as well as news, travel and finance sites—and both are weak in Web search market, where Google dominates.

According to Wall Street Journal, Yang Zhiyuan, Founder of Yahoo Inc, stated that it will take ‘quite a bit of time' to weigh all of its strategic options, including remaining independent.

Speculation about a Micro-Yahoo deal has swirled through the markets for more than a year, as investors looked for a joint stand against powerful Google, which possesses a 77 percent share of the global Web search market.

Should Yahoo Inc accept Microsoft offer, it would be the biggest Internet deal since the ill-fated Time Warner-AOL merger.

However, skeptics also showed their concerns over culture clash, which was seen in AOL's purchase of Time Warner in 2001.

Microsoft and Yahoo have very different corporate cultures and it would be quite difficult for Yahoo, an iconic Silicon Valley company with a free-flowing, fun-loving attitude, to fit in with the button-up, competitive Microsoft, the world's biggest software maker.