Microsoft Corp plans to acquire the 50.1 per cent it doesn't already own in country-specific portal MSN Israel Ltd. from partner Internet Gold Ltd., the companies said yesterday.

The companies said in a statement that they're "discussing the terms of migration and possible future cooperation." Meantime, they're still "working together to support employees, advertisers and users."

MSN Israel, established in 2000, is part of the Redmond, Washington, software giant's portal network, which operates in 44 countries. In almost all these countries, Microsoft wholly owns the portals, the companies said.

The msn.co.il portal will continue to operate throughout the transition period and both parties are working together to support employees, advertisers and users through this period.

Internet Gold is the Petach Tikva, Israel-based group with interests in internet and international-phone service through its 72.4-per cent-owned Smile Communications Ltd. subsidiary. It also has businesses in information-technology integration and websites and e-commerce. MSN Israel accounted for less than 3 per cent of Internet Gold's 2007 revenue, which totaled.1.18 billion shekels ($360 million).

Eli Holtzman, CEO of Internet Gold, said, "We have been happy to partner with Microsoft in establishing MSN Israel over the last eight years. Since then, we have developed MSN Israel into a leading portal in Israel. Given the change in the parties' online strategies we have agreed it makes sense for Microsoft to operate msn.co.il independently. We believe this is the right move for both parties and anticipate it will have a positive impact on our results."

"During the last few years, the Internet Gold Group has significantly expanded its activities in a variety of communications areas and, as a result, our MSN Israel operations currently represent a minor portion of the group's total revenues. Thus, we have decided recently to change course and seek alternatives for growth. We are continuing to actively examine new and financially significant areas of activity in and out of Israel, which have substantial growth potential and will drive our group to its next phase of business," Holtzman added.

Danny Yamin, general manager of Microsoft Israel, said the move will enable both companies to "deepen our impact on the Israeli market." Microsoft sees "some fantastic opportunities for growth and development of both the MSN portal and the Windows Live services," he said.

He signed off by saying, ''It is MSN's goal worldwide to deliver the best of local and international content - integrated with our Windows Live services- providing ways for consumers to interact and engage with MSN and more importantly, with each other. We call this 'the social portal.' Content is a very important part of this strategy and we will continue to partner with local and global premium content providers to deliver this."