Internet search engine Yahoo! is to reject Microsoft's $44.6 billion (£22.4 billion) takeover bid, a US newspaper reports.
The Wall Street Journal says the Yahoo! board has dismissed the $31 (£16) per share offer, saying this price "massively undervalues" the company.
Software giant Microsoft had been hoping to convince Yahoo!'s board of the value of its offer to improve competition with its main rival, Google.
Now the Wall Street Journal reports the offer does not take into account the risks Yahoo! would be assuming going into such an agreement, it adds.
Analysts are unsurprised by the unconfirmed reports, which if true would reflect an expected resistance from Yahoo!'s board to the hostile bid.
Many believe Microsoft will be forced into putting a much higher price on the table.
"Yahoo! still has one of the largest brands on the internet,'' Bill Tancer of San Francisco-based research firm Hitwise Pty told the Bloomberg news agency.
"It confines Google to continue to grow their revenue from a single revenue stream, which is search," he explained.
Google is doing all it can to prevent a Microsoft-Yahoo! tie-up taking place. On Monday it attacked the takeover bid as undermining "openness and innovation", with senior vice president David Drummond warning the hostile bid "raises troubling questions" for the internet's future.
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