Microsoft offered $40.8 billion to acquire Yahoo through a hostile takeover or outright purchase, as it sought to integrate Yahoo into its expanding business empire. However, Microsoft was unable to finance the acquisition despite having over $19 billion in cash reserves. The document discusses Yahoo's history and rise as a major internet portal since its founding in 1994 by David Filo and Jerry Yang. It describes how Yahoo innovated by categorizing the unorganized internet into subcategories and grew significantly using strategies like product bundling, exclusive content deals, and generating revenue from online advertisements. Microsoft wanted to acquire Yahoo given its strong position and competitive advantages in the internet space.