Yahoo turned down Microsoft's US$44.6 billion takeover bid as “inadequate” Monday, without explaining how its management will match the payoff that the shareholders would have received if the offer had been accepted, MSNBC reported.

The rebuff had been widely anticipated due to the leak of Yahoo's intention during the weekend.

Yahoo said in its formal response that its board had concluded “Microsoft's unsolicited offer 'substantially undervalues' the company.”

Yahoo's stock price had dropped by more than 40 percent in the three months leading to Microsoft's bid, which was valued at $31 per share when it was announced Feb. 1. The offer represented was 62 percent above Yahoo's market value at the time, MSNBC reported.

According to The Associated Press and Reuters, Yahoo's board seemed quite sure it will be able to extract a higher offer from Microsoft or its management team will finally be able to achieve its repeated promises of a turnaround, which has been in the works for 18 months.

Many industry analysts believe that Microsoft will eventually raise its offer to $35 to $40 per share, or the overall value by $5 billion (€3.44 billion) to $12 billion (€8.25 billion).

Microsoft didn't immediately comment on Yahoo's response Monday morning.

Meanwhile, Yahoo is seeking to restart merger talks with AOL in order to defend itself against an unsolicited bid approach from Microsoft, according to The Times Monday.

The Times said Yahoo was also considering tie-ups with groups such as Google and Disney.

Yahoo and AOL had previously tried to join forces, but could not reach an agreement on the price of a deal, MSNBC reported.