In the game of tit for tat going on between Microsoft and Yahoo, the Redmond Giant issued a response late yesterday to Yahoo’s rejection earlier in the week.

Brad Smith, Microsoft's general counsel, issued a statement saying: "Any definitive agreement between Yahoo and Google would consolidate over 90 per cent of the search advertising market in Google's hands. This would make the market far less competitive, in sharp contrast to our own proposal to acquire Yahoo. We will assess closely all of our options.

"Our proposal remains the only alternative put forward that offers Yahoo shareholders full and fair value for their shares, gives every shareholder a vote on the future of the company, and enhances choice for content creators, advertisers, and consumers."

Microsoft chief executive Steve Ballmer had warned Yahoo that he would lobby stockholders to elect a new board of directors if the current board failed to accept a deal.

Yahoo sent a written response to last week's letter from Ballmer, stating that the board's view of the proposal had not changed.

"We continue to believe that your proposal is not in the best interests of Yahoo and our stockholders," read the statement.

"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."

Microsoft proposed a stock deal worth $44bn to buy Yahoo in late January. Yahoo rejected the offer less than two weeks later, saying that the proposed deal greatly undervalued the firm.