Yahoo has officially rejected Microsoft’s £22bn bid for the company. In a statement today Yahoo said its board of directors, in consultation with financial and legal advisors, has concluded that Microsoft was not in the best interests of Yahoo.

Further, Yahoo said its board would continue to evaluate other "strategic options."

"We remain committed to pursuing initiatives that maximize value for all stockholders," the statement said.

Microsoft offered $31 per share on February 1, 2008 which was a 62 per cent premium over the Yahoo closing price the day before. Since then, Yahoo stock has risen in value and was trading just above $29 on Monday morning.

Yahoo executives were rumored to have been searching for a buyer other than Microsoft. However, no buyer has emerged. This latest move mean that Microsoft may have make a more generous offer, or pursue a hostile takeover.

Microsoft said it believes the acquisition of Yahoo would give it the engineering talent and resources to compete better with Google. While Microsoft and Yahoo have had some success with display advertising, Google has built a fortune on contextual text ads that appear during a search.