Microsoft is growing impatient with the Yahoo deal. According to latest buzz on internet, the software behemoth has given an ultimatum to Yahoo -- accept $31-a-share offer gracefully in three weeks time or risk a hostile takeover attempt. Steve Ballmer said, "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." What's more, he also threatened to lower the bid amount if Yahoo didn't consider their case. "That action will have an undesirable impact on the value of your company from our perspective which will be reflected in the terms of our proposal," Ballmer said.

In its response, Yahoo is said to have rejected Microsoft's offer due to valuation issues. “Our board’s view of your proposal has not changed,” Yahoo said in a statement. “We continue to believe that your proposal is not in the best interests of Yahoo and our stockholders. 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. Furthermore, as a result of the decrease in your own stock price, the value of your proposal today is significantly lower than it was when you made your initial proposal.”

The statement added: “We consider your threat to commence an unsolicited offer and proxy contest to displace our independent board members to be counterproductive and inconsistent with your stated objective of a friendly transaction. We are confident that our stockholders understand that our independent board is best positioned to objectively and knowledgeably evaluate our company’s alternatives and to maximize value.”

[Via Yahoo, NYT]