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Earlier today Yahoo’s board of directors officially announced, though many already knew what the answer was going to be, that they have rejected Microsoft’s proposal because it undervalues the Yahoo! company. Not to be outdone, Microsoft has now responded, saying today in a press release that:

It is unfortunate that Yahoo! has not embraced our full and fair proposal
to combine our companies. 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.

We are offering shareholders superior value and the opportunity to
participate in the upside of the combined company. The combination also
offers an increasingly exciting set of solutions for consumers, publishers
and advertisers while becoming better positioned to compete in the online
services market.

A Microsoft-Yahoo! combination will create a more effective company that
would provide greater value and service to our customers. Furthermore, the
combination will create a more competitive marketplace by establishing a
compelling number two competitor for Internet search and online
advertising.

The Yahoo! response does not change our belief in the strategic and
financial merits of our proposal. As we have said previously, Microsoft
reserves the right to pursue all necessary steps to ensure that Yahoo!’s
shareholders are provided with the opportunity to realize the value
inherent in our proposal.

I guess for now Microsoft will just have to sit in the backseat when it comes to internet search and advertising, and wait to see what Yahoo! decides to do with its future.

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