Sunnyvale, Calif. - Yahoo (NASD: YHOO) on Monday reiterated its decision to reject Microsoft's (NASD: MSFT) unsolicited takeover bid for the company, but left open the possibility of a deal, should the software giant raise its offer. In an open letter to Microsoft CEO Steve Ballmer, Yahoo CEO Jerry Yang and chairman Roy Bostock wrote, "We are open to all alternatives that maximize stockholder value. To be clear, this includes a transaction with Microsoft if it represents a price that fully recognizes the value of Yahoo on a standalone basis."

They also, however, said that Microsoft's offer, originally worth $44.6 billion, undervalues the company, particularly since Microsoft's share price has dropped, lowering the overall value of the potential deal.

Yahoo added that its board has been "actively and expeditiously exploring our strategic alternatives," and called Microsoft's threat to launch a proxy battle to replace Yahoo board members "counterproductive and inconsistent with your stated objective of a friendly transaction."

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