The latest offer made by Microsoft and Yahoo investor Carl Icahn was for Yahoo to sell only its search engine technology to Microsoft and have the rest remain under the control of the Yahoo board.

Yahoo said they were given less than 24 hours to respond to what they called a "ludicrous offer to accept" and that they will not be "bludgeoned into a transaction that is not in the best interest of our stockholders."

Microsoft's offer implied the removal of the current Yahoo board of directors and top management team, in favor to one selected by Icahn.

"Microsoft and Mr. Icahn are trying to dismantle the company and deliver our search business to Microsoft on terms that would be disadvantageous to Yahoo stockholders. We are prepared to let our stockholders, not Microsoft and Carl Icahn, decide what is in their best interests and we look forward to the upcoming vote" said Yahoo Chairman Roy Bostock.

The proposal came in on Friday evening, after Microsoft's general counsel discussed with one of Yahoo's laywers to initiate a discussion between Microsoft CEO Steve Ballmer and Yahoo Chairman Roy Bostock.