Microsoft to Buy Yahoo?

Microsoft is attempting a $44.6 billion takeover of Yahoo.com.

Microsoft is reportedly preparing a boardroom coup at Yahoo! if the internet search engine fails to accept its 44.6 billion US dollar (£22.4 billion) bid.

The software giant is planning to use rights as a Yahoo! shareholder to oust executives and achieve a swift takeover of the firm, the Times newspaper said.

Microsoft unveiled its deal on Friday, saying the two companies combined would be better placed to challenge search engine favourite Google. But it also hinted at a hostile bid by reserving the right "to pursue all necessary steps" to win over the firm's shareholders if the deal was opposed.

As a shareholder of Yahoo!, Microsoft would be able to nominate executives to be voted on by all shareholders, according to The Times.

The report comes after comments from Google's top legal officer that Microsoft's bid to buy rival Yahoo! was "troubling" and could threaten the openness of the internet.

David Drummond, Google's chief legal officer, said: "Microsoft's hostile bid for Yahoo! raises troubling questions. This is about more than simply a financial transaction, one company taking over another. It's about preserving the underlying principles of the internet: Openness and innovation."

Alternatively, Yahoo may join forces with Google.

SAN FRANCISCO/NEW YORK (Reuters) - Yahoo Inc would consider a business alliance with Google Inc as one way to rebuff a $44.6 billion takeover proposal by Microsoft, a source familiar with Yahoo's strategy said on Sunday.

Yahoo management is considering revisiting talks it held with Google several months ago on an alliance as an alternative to Microsoft's bid, that source said. At $31 a share, Yahoo believes the bid undervalues the company, two sources said.