US Internet company Yahoo on Monday rejected software giant Microsoft's three-week ultimatum to accept a takeover offer, but left the door open to a higher bid.
"We continue to believe that your proposal is not in the best interests of Yahoo and our stockholders," Roy Bostock, chairman of Yahoo's board and Jerry Yang, its chief executive officer, said in a letter to Steve Ballmer, CEO of Microsoft Corporation.
"Contrary to statements in your letter, stockholders representing a significant portion of our outstanding shares have indicated to us that your proposal substantially undervalues Yahoo," the letter went on to say.
The letter came in response to an ultimatum issued by Microsoft on Saturday for Yahoo to accept its $ 4.6 billion takeover offer in three weeks or face a hostile battle for the support of the Internet giant's shareholders.
In an open letter to the Yahoo board of directors, Ballmer accused the company of avoiding serious negotiations over its unsolicited February 1 bid and warned that any further delays could result in a less attractive offer for Yahoo.
"We believe now is the time for our respective companies to authorise teams to sit down and negotiate a definitive agreement," Ballmer said in the letter, which was posted on Microsoft's website.
"If we have not concluded an agreement within the next three weeks, we will be compelled to take our case directly to your shareholders, including the initiation of a proxy contest to elect an alternative slate of directors for the Yahoo board.