Software and technology giant Microsoft has given Yahoo a three-week deadline to respond to its offer to buy out the internet company for $44.6 billion.

Microsoft CEO Steve Ballmer said his company would take its case straight to Yahoo’s shareholders if Yahoo’s directors did not reply by 26 April.

“It is unfortunate that by choosing not to enter into substantive negotiations with us, you have failed to give due consideration to a transaction that has tremendous benefits for Yahoo!’s shareholders and employees,”

wrote Ballmer, in the letter addressed to Yahoo!’s board of executives.

The letter also mentioned that the threat was a step away from what Yahoo! projected to be a “speedy and ultimately friendly transaction.” The letter continued to express Microsoft’s belief that Yahoo! shareholders were keen for Yahoo! to sign the buyout, especially considering Yahoo!’s recent decline in market value and performance ratings.

The substitute to Yahoo!’s agreement to sign the deal would be a proxy bid, which involves Microsoft, a Yahoo! shareholder, installing its executives into the Yahoo! board, thereby ousting Yahoo! executives from their positions.

The original offer made by Microsoft on February 1 was $31 a share, adding up to a grand total of about $44.6 billion. But, after a collapse 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.

Jerry Yang rejected the Microsoft’s bid On February 11, saying that it undervalues the company. Yahoo asked for a $12 billion increase in Microsoft’s offer, which has not happened so far. Rumors persist that Microsoft already turned to Bear Stearns Cos. Services in the Yahoo situation.

It is common knowledge that Yahoo has been searching for a backup option to Microsoft’s offer, discussing different partnership mechanisms with Google, AOL and the News Corporation. However, no deal has been struck so far.

Sources: BBC, efluxmedia