Worried Microsoft, confused Yahoo & laughing Google SAGA continues. After Microsoft made a juicy proposal, Yahoo shot back rejecting the same. Now Microsoft has formally reacted to the rejection.

Guess what? It seems Mr Gates is huffy puffy about rejection and giving all strong signals of a Hostile YAHOO! murder. Here is official Microsoft line…

“…It is unfortunate that Yahoo! has not embraced our full and fair proposal to combine our companies. Based on conversations with stakeholders of both companies, we are confident that moving forward promptly to consummate a transaction is in the best interests of all parties.

We are offering shareholders superior value and the opportunity to participate in the upside of the combined company. The combination also offers an increasingly exciting set of solutions for consumers, publishers and advertisers while becoming better positioned to compete in the online services market.

A Microsoft-Yahoo! combination will create a more effective company that would provide greater value and service to our customers. Furthermore, the combination will create a more competitive marketplace by establishing a compelling number two competitor for Internet search and online advertising.

The Yahoo! response does not change our belief in the strategic and financial merits of our proposal. As we have said previously, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!’s shareholders are provided with the opportunity to realize the value inherent in our proposal.”

Going by sentences in bold, a hostile Yahoo takeover could be the next step. Be careful yahoo, Gates are going to crash on you. In the meantime, Yahoo Flickr users continue there campaign against the deal in images.