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San Francisco: Yahoo Inc's rejection of Microsoft Corp's unsolicited takeover bid left investors guessing the next move in a tense mating dance that may hatch a more imposing challenger to Google Inc or disintegrate into a bruising brawl.
The rebuff, formally announced early Monday, was not a surprise because Yahoo had leaked its intention over the weekend.
But Yahoo did not raise antitrust concerns about the proposed deal and included language that seemed to invite a higher offer from Microsoft, the world's largest software maker.
"The board of directors is continually evaluating all of its strategic options in the context of the rapidly evolving industry environment and we remain committed to pursuing initiatives that maximise value for all stockholders," Yahoo said in a statement.
Microsoft, though, did not seem inclined to raise the bid Monday, releasing a statement describing its current bid as 'full and fair.' Calling Yahoo's decision 'unfortunate,' Microsoft did not back off from its quest either. "Based on conversations with stakeholders of both companies, we are confident that moving forward promptly to consummate a transaction is in the best interests of all parties," the Redmond, Washington-based company said.
Microsoft also emphasised it's prepared to "pursue all necessary steps" to get the deal done, raising the prospect that it could take the bid directly to Yahoo shareholders with a so-called 'exchange offer' or escalate the acrimony even further by trying to oust Yahoo's 10-member board later this year.
While assessing its response to Microsoft, Yahoo's board also examined a wide range of alternatives that included forging an ad partnership with Google, which paid nearly $5 billion in marketing commissions to thousands of Web sites last year.
Without identifying its sources, the Times of London also reported Yahoo is exploring a merger with Time Warner Inc's AOL, another popular Internet property that has been struggling in recent years. A Yahoo spokesman declined to comment on the report.
Investors appear convinced Microsoft's bid remains Yahoo's best bet, given the Sunnyvale-based company's profits have been steadily declining despite a management shake up eight months ago and repeated promises of a turnaround extending back to 2006.
Microsoft's advisers are believed to be working behind the scenes to rally support among Yahoo shareholders and determine how much more the bid needs to be increased to force Yahoo's board to negotiate a friendly deal.
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