Yahoo! rejects Microsoft's 'inadequate' £22billion takeover bid
Yahoo! yesterday rejected Microsoft's £22billion takeover bid, saying it "substantially undervalued" the company.
Microsoft made the surprise offer for the internet search engine ten days ago.
It is thought the software giant is hoping to challenge the dominance of the world's leading search engine, Google.
The Yahoo! board concluded the £15-per-share proposal was not in the best interests of its shareholders.
It said the bid "substantially undervalues" Yahoo!'s global strength.
Some Wall Street analysts believe the rejection of the initial offer is an attempt to get Microsoft to raise its bid.
Analysts said Microsoft could be persuaded to increase its offer to as much as £20 a share.
However, Yahoo! is understood to have restarted merger talks with AOL as a means of defending itself against Microsoft's hostile approach.
Scroll down for more...
Uncertain future: Yahoo! HQ in Sunnydale, California
In a statement, Yahoo! said: "After careful evaluation, the board believes that Microsoft's proposal substantially undervalues Yahoo! including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects.
"The board has carefully reviewed Microsoft's unsolicited proposal with Yahoo's management team and financial and legal advisors and has unanimously concluded that the proposal is not in the best interests of Yahoo! and our stockholders."
Many analysts expect Microsoft will bring a second deal to the table, upping their previous offer by £2.5billion to £6billion.
Yahoo! is hoping to restart merger talks with AOL after previous discussions broke down, The Times reported today.
Yahoo! has spent the past week in talks with advisers to discuss the possibility of linking up with media and technology companies in a bid to fight the Microsoft offer.
Microsoft's offer of $31 (£15.9) per share was below the minimum of $40 (£20.5) per share wanted by the Yahoo! boardmembers.
Re-starting talks: Yahoo! are in new discussions with AOL
Microsoft's bid for Yahoo! left some analysts concerned about the future of the internet.
Yahoo!'s rival search engine Google said Microsoft's bid raised "troubling questions" over the future of free email and instant messaging services such as Hotmail.
More than 56 per cent of U.S. internet searches are carried out through Google, with Yahoo! trailing in second place on 17.7 per cent and Microsoft third on 13.8 per cent.
