Yahoo's share price is well below the $31 Microsoft offered for it in February
Yahoo has angrily rejected a joint takeover offer from Microsoft and the investor Carl Icahn.
Microsoft would have bought Yahoo's search engine while Mr Icahn would have ended up with the rest of the business.
Yahoo objected to being given only 24 hours to consider the offer and there being no opportunity to negotiate the terms of the deal.
"It is ludicrous to think that our board would accept such a proposal,"
Yahoo said in a statement.
"This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo!'s stockholders in mind," Roy Bostock, chairman of Yahoo, said.
Still for sale
The proposal involved the immediate removal of the Yahoo board as well as its top management.
The statement from Yahoo repeated the offer to sell the entire company to Microsoft for at least $37 a share and suggested that a takeover of the entire company would be much simpler than the proposed restructuring.
Microsoft offered $31 a share for Yahoo in February. On Friday the shares closed at $23.16.
The latest offer comes weeks before Yahoo's 1 August annual meeting, when Mr Icahn will be trying to replace its board with his own slate of directors.
Mr Icahn owns about 5% of Yahoo.
Microsoft has said it is no longer interested in negotiating with the current directors, but will enter talks if a new board is in place in August.