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Yahoo rejects offer from Microsoft again

The stand-off between Microsoft and Yahoo over the technology giant's $42bn (£21bn) takeover offer for the internet pioneer appeared to get personal, as Jerry Yang, Yahoo's chief executive, once again rejected the bid, saying it undervalues the company.

Mr Yang delivered his res-ponse yesterday to Steve Ball-mer, Microsoft's chief executive, who had given Yahoo a three-week deadline to agree to the cash-and-shares deal or face a battle to wrest control of the board at the annual shareholder meeting.

Mr Yang said Yahoo had never refused to talk to Microsoft, that Mr Ballmer's open letter "mischaracterised" the contacts between the two companies, and that it was Mr Ballmer himself who was being intransigent.

"We have had constructive conversations together regarding a variety of topics, including integration and regulatory issues," Mr Yang said.

"Your comment that we have refused to enter into negotiations to conclude an agreement are particularly curious given we have already rejected your initial proposal, nominally $31 per share at the time, for substantially undervaluing Yahoo and your suggestions in your letter and the media that you are considering lowering the value of your proposal.

"Moreover, Steve, you personally attended two of these meetings and could have advanced discussions in any way you saw fit."

Yahoo says it is not opposed to a transaction with Microsoft if it is in the best interests of shareholders. Those who have spoken publicly have said they hoped Microsoft would increase its offer.

While Yahoo searched for an alternative deal, such as a merger with AOL or a tie-up with Rupert Murdoch's MySpace, neither proposal has advanced far, it is believed. Meanwhile, Mr Yang's go-it-alone strategy, presented to shareholders last month, failed to excite the share price. With the US economy slowing down, there are also gathering fears that Yahoo's advertising revenue could be weaker than promised.