Yahoo has rejected the recent takeover bid from Bill Gates’ Microsoft stating that the offer was too low. Microsoft recently offered Yahoo over $40bn (£20.5bn) to takeover the company and all its assets but Yahoo say that Microsoft’s evaluation of the company is undervalued and the deal is not in the best interests of the shareholders.

The offer which Microsoft made was worth $31 a share while Yahoo shares were worth $19.18 at the time of the original offer but sources have said that Yahoo are not willing to consider a takeover bid until a deal worth at least $40 a share is put on the table. Microsoft are expected to make an improved offer for the yellow, smiley faced company but by no means does this mean a deal worth $40 a share will be agreed. If a deal worth $40 a share is put forward, Microsoft will have to cough up an extra $12bn on top of the offer previously made.

Yahoo are also said to be re-opening talks with AOL over a possible merger deal, that might just push Microsoft into magically finding that extra $12bn in those deep pockets of its. For a greater view on Microsofts takeover ambitions why not check out our own Nigel Cookes thoughts on the Microsoft/Yahoo deal.