Yahoo! bought time yesterday to secure a deal with another media group or technology company in an attempt to avoid falling into the clutches of Microsoft.

The online search engine said that it had extended the deadline by which shareholders could nominate new directors to its board. That deadline had been due to fall on March 14.

Microsoft had been planning a boardroom coup before the previous deadline by nominating its own directors, who would effectively force Yahoo! to begin formal bid talks or accept its $41.7 billion (£21 billion) cash-and-shares offer for the company.

The extension came as talks between Yahoo! and AOL, Time Warner’s internet business, were believed to have accelerated.

Yahoo! said yesterday that it had extended the deadline until ten days after the announcement by the company of its annual meeting, the date of which has yet to be decided.

In a statement, Yahoo! said: “To the extent that the extension of the nomination deadline has the effect of postponing the nomination of one or more directors by any party, it will allow Yahoo!’s board to continue to explore all of its strategic alternatives . . . without the distraction of a proxy contest.”

At the beginning of last month, Microsoft launched America’s biggest hostile takeover approach, offering to buy the online search engine for a 61 per cent premium to its share price on the day before the takeover plans were made public. The California-based Yahoo!, which rejected Microsoft’s proposal as undervaluing the group, is in talks with a number of companies as part of an attempt to team with another business and avoid a takeover by Microsoft.

Yahoo! is talking to News Corporation, the parent of The Times, and has also approached AOL about rekindling a merger between the two groups. It is not known how advanced talks with News Corp have become. Jeffrey Lindsay, of the American broker Sanford Bernstein, told his clients yesterday: “It looks as if they’ve bought themselves several weeks by proposing this delay. It’s probably the maximum they can do without incurring a lot more shareholder ill-will.”

Microsoft wants to buy Yahoo! so that it can compete more aggressively with Google, the world’s largest internet company. Google has the lion’s share of the online advertising industry – estimated to be worth $40 billion and expected to double in two years.

A year ago, Microsoft tried to buy Yahoo! but was told by the online search group’s board that it was not for sale. The two had, however, reached an agreement to devise ways of cooperating with each other to fight Google. Yahoo! is believed to have reneged on its part of the bargain.

Microsoft and Yahoo! did not return calls yesterday.

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