Today, MSFT offered to pay $31/share to acquire Yahoo! in a cash/stock deal.

Yahoo!’s board promptly countered that it would mull the deal.

This is getting interesting. My first take is Yahoo! will be acquired, by whom, time will tell. Earlier in 2007 when Yahoo! retained some credibility with investors, MSFT whispered a $50B offer and many shareholders would have balked. With the trifecta of Yang/Decker/Morgensen not winning over any naysayers at the more recent earnings call, I think a lot of shareholders who would have sat on the sidelines would be more willing to sell now. But the price of $44.6B is a bit lower than the $50B expected offer. Mind you, that would have been a 100% premium. Where this will get interesting frankly is that this is not a Rupert Murdoch-esque “F***-Y**” price that scares away other bidders.

Do you really think a PE firm would scare away from bidding $45B, or even $50B? After all, Yang is known to be adverse to all things that emanate from Redmond… so he would be willing to nudge the board to someone else’s arms (even a PE firm) if the deal was competitive.

Of course, time is money, and Yang has long plenty of both.

Much, much more to come today. Including what Google must be thinking.

Note: long Yahoo!