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Chief executive Jerry Yang and chairman Roy Bostock have written the missive in response to a letter that was sent to Yahoo! directors by Microsoft's chairman Steve Ballmer, following its January 31 offer to buy Yahoo! for $44.6bn.

Ballmer wrote to Yahoo! that if it does not agree to a deal within three weeks, Microsoft will bypass directors and go straight to the company's shareholders, adding this would have an "undesirable impact on the value of your company from our perspective, which will be reflected in the terms of the proposal".

In their response Yang and Bostock refute a number of points made by Ballmer, and reiterate their belief that the offer made by Microsoft undervalues the company.

Addressing "Steve" personally, the letter says: "Our board's view of your proposal has not changed. 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."

They take issue with accusations from Ballmer that Yahoo! has refused to enter into discussions over a deal, saying: "We regret to say that your letter mischaracterises the nature of our discussions with you. We have had constructive conversations together regarding a variety of topics, including integration and regulatory issues.

"Your comment that we have refused to enter into negotiations to conclude an agreement are particularly curious given we have already rejected your initial proposal, nominally $31 per share at the time, for substantially undervaluing Yahoo! and your suggestions in your letter and the media that you are considering lowering the value of your proposal. Moreover, Steve, you personally attended two of these meetings and could have advanced discussions in any way you saw fit."