Yahoo has rejected Microsoft's offer yet again, saying that the current bid undervalues its company but that it remains open to a deal with the software giant.
In a letter to Yahoo's board, Microsoft's chief executive, Steve Ballmer, threatened to take its offer direct to shareholders in three weeks - possibly at a lower rate - if Yahoo's board fails to respond.
But Yahoo's CEO Jerry Yang responded with a letter yesterday saying that the company would block any takeover attempt unless Microsoft raised its offer.
"We consider your threat to commence an unsolicited offer and proxy contest to displace our independent board members to be counterproductive and inconsistent with your stated objective of a friendly transaction," the letter said.
"We are confident that our stockholders understand that our independent board is best positioned to objectively and knowledgeably evaluate our company's alternatives and to maximise value."