The Week: City news - Microsoft angers Yahoo!

Yahoo! has attacked Microsoft after its chief executive, Steve Ballmer, wrote a letter to the company warning that he will launch a hostile takeover bid if it does not agree to a merger within the next three weeks.

According to a report in The Wall Street Journal, Microsoft threatened to reduce the $44.6 billion (£22.5 billion) offer it originally made in January and replace the Yahoo! board with its own directors if it fails to agree terms. Yahoo! countered by accusing Microsoft of "mischaracterising the nature of our discussions" in the letter and repeated that the original offer substantially undervalues the business.