One of the motivations behind this is to try to increase their competitiveness against Google. It's not really an "omg take over Yahoo" thing.
http://online.wsj.com/article/SB120186587368234937.html?mod=hpp_us_whats_news
That being said, however, it is "hostile" --
[quote=WSJ article]The offer, made in a letter sent Thursday by Chief Executive Steve Ballmer to Yahoo's board of directors, comes after Yahoo had resisted Microsoft's behind-the-scenes advances over more than a year. One person familiar with the matter said that Microsoft decided to "go hostile" with its bid -- ending years of internal debate over whether to buy Yahoo -- within the past few weeks after Yahoo ignored its latest overtures.[/quote]
Right now Google's dominating the search and ad markets, but MS has technology and Hotmail (which has a bit more than 5 times the number of users that Gmai hasl) and Yahoo has its web content (basically all the crap other than search), which is why MS is hoping that by adding its stuff to Yahoo's stuff it can gain some ground.