Microsoft is fed up with two months of waiting, and in the April 5th letter to Yahoo Inc., they resorted to an ultimatum, which states that if the two companies will not begin a negotiation on a definitive agreement within the next three weeks, they will take the case directly to the shareholders and start a proxy contest to elect a slate of director for the Yahoo Board.

In the letter sent to Yahoo on Saturday and signed by Steve A. Ballmer, Chief Executive Office at Microsoft, the Redmond-based company said about the wasted time: “During these two months of inactivity (…)the public equity markets and overall economic conditions have weakened considerably […] By any fair measure, the large premium we offered in January is even more significant today. We believe that the majority of your shareholders share this assessment…”

On April 7, Yahoo responded to the letter with a warm “Dear Steve”, saying the company took into consideration the unsolicited proposal and reached an unanimous conclusion that it was not in the best interest of Yahoo and its stockholders to accept it. However, they also said they did not and will not oppose a transaction with Microsoft as long as it is in the best interests of their stockholders.

Still, Microsoft’s proposal doesn’t seem to appeal to Yahoo: “Our Board’s view of your proposal has not changed. We continue to believe that your proposal is not in the best interests of Yahoo and our stockholders […] Furthermore, as a result of the decrease in our own stock price, the value of your proposal today is significantly lower than it was when you made your initial proposal.”

The initial offer made by Microsoft on February 1 was $31 a share, adding up to a grand total of approximately $44.6 billion but after a downfall in Microsoft’s shares, it is now worth about $42 billion, still making it, if finalized, the biggest-ever takeover in the high-tech industry. Despite constant rejection from Yahoo however, it is hard to imagine Yahoo would be able to make a deal with somebody else than Microsoft. Just three weeks left, and Yahoo should give a lot of thought to the proposal.