Yahoo failed to comment on the bid with the result that the search giant could become embroiled in a hostile takeover bid from Microsoft.

Microsoft is eager to merge the two companies so it can take on Google and capture a share of the £20bn online ad market.

The two companies are in a standoff over the price. Yahoo said last week it remained open to a Microsoft merger, but claimed that the current offer "substantially undervalues" the company and it was continuing to explore alternative deals.

News Corp has thrown its hat into the bidding race but it is uncertain how committed Rupert Murdoch's organisation is to buying out Yahoo.

Founded by Jerry Yang and David Filo in 1994, Yahoo has seen its share price soar because of the interest from Microsoft. For this reason, some shareholders are keen for Yahoo to accept Microsoft's bid.

Web User will bring you more news on this story as it happens.

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