Yahoo passes on Microsoft offer

Yahoo on Monday announced that it is rejecting Microsoft's multibillion-pound buyout offer, citing that it undervalues the company.

The announcement had largely been expected, as reports emerged over the weekend such a decision had been made by Yahoo's board of directors.

"Yahoo's board of directors has carefully reviewed Microsoft's unsolicited proposal with Yahoo's management team, and financial and legal advisers, and has unanimously concluded that the proposal is not in the best interests of Yahoo and our stockholders," the company said in a statement on Monday.

"After careful evaluation, the board believes that Microsoft's proposal substantially undervalues Yahoo, including our global brand, large worldwide audience, significant recent investments in advertising platforms and future growth prospects, free cash flow and earnings potential, as well as our substantial unconsolidated investments," the company further noted.

Yahoo said its board will continue to evaluate its strategic options and pursue a path to "maximise value for all stockholders".

Microsoft, which on 1 February offered a cash-and-stock deal initially valued at $44.6bn (£22.3bn), is likely to already have contingency plans, such as attempting to create a board of directors that would be friendlier to a Microsoft deal, said proxy solicitors.

Yahoo's annual nomination process for board elections is set to start on Wednesday and run through 14 March, according to a US Securities and Exchange Commission filing. Each year, all 10 of Yahoo's board seats are up for grabs.

Microsoft may already be eyeing those seats.