Late last week news broke that Microsoft had offered to acquire Yahoo! for almost $45 billion, or $31/share, a 62 percent premium over Thursday’s closing price of just over $19. This would be Microsoft’s largest acquisition to date.

Now I have nothing against Yahoo! or even Microsoft for that matter, but this acquisition makes no sense to me and reeks of sheer desperation. First Yahoo! wants no part of the deal, but with this offering price I see no way it won’t go through. I can still recall how badly the purchase of Netscape went, where Netscape employees (from the top-down) didn’t want to be a of AOL, and we all now how that worked out.

Plus, the sheer overlap in their search, email, ad networks, messaging, and social networking options are vast. Moving forward I can’t see how they could maintain both the Yahoo! and MSN suite of products, so you’ll have Microsoft phasing out their products and folding them in under the Yahoo! brand. Wow, what a waste of effort on Microsoft’s part.

Now of course Microsoft can afford this, that isn’t the issue. I just don’t see how merging two subpar products can help them compete against Google, much less the Facebook and MySpace’s of the world. In the Web 2.0 world I just don’t think you can buy yourself market share. It works from a smaller point-of-view but not on this scale. And for $45 billion Microsoft could buy a lot of YouTube’s, Flickr, and Del.icio.us who were actual market leaders.