Microsoft ups the ante on Yahoo!

Global - Two months after its initial offer was rejected, Microsoft has turned up the heat on Yahoo!, threatening to go hostile if its deal is not met within three weeks.

The company last night made public a strongly worded letter to Yahoo! executives stating that there had been "no meaningful negotiation to conclude an agreement".

"Our goal in making such a generous offer was to create the basis for a speedy and ultimately friendly transaction. Despite this, the pace of the last two months has been anything but speedy," the letter said.

"While there has been some limited interaction between management of our two companies, there has been no meaningful negotiation to conclude an agreement."

The letter, signed by Microsoft chief executive Steven Ballmer, emphasised that during the two months Microsoft's proposal was unmatched, and that over the same period, Yahoo!'s search and page view shares had declined.

"Given these developments, we believe now is the time for our respective companies to authorize teams to sit down and negotiate a definitive agreement.

"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."

Yahoo! is yet to make a formal response.