Yahoo!, the internet search group, has received and rejected a new takeover proposal from Microsoft and Carl Icahn, the billionaire investor, which it described as “completely absurd and irresponsible”.

Although Microsoft and Mr Icahn have confirmed that they were in talks about Yahoo!, the latest approach represents the first time that the pair have formally made a joint proposal.

Under the proposal, Microsoft would have taken on Yahoo!'s search engine business and Mr Icahn would have acquired its advertising unit.

Yahoo! said that it had been given less than 24 hours to accept and that the two suitors had said that they were unwilling to negotiate the basic terms offered in their previous dealings with Yahoo!, such as the immediate replacement of its board and management.

Yahoo! said that it had repeated its offer to discuss selling itself to Microsoft for a minimum of $33 a share - shares closed at $23.50 on Friday night - but that Microsoft rejected it.

Yahoo! said that Microsoft had imposed the “completely absurd and irresponsible condition” that it would not deal with, or otherwise engage with, Yahoo!'s management to reach agreement on the new proposal.

Roy Bostock, Yahoo!'s chairman, discussed the offer over the phone with Steve Ballmer, Microsoft's chief executive, and Mr Icahn. He said: “This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo!'s stockholders in mind. It is ludicrous to think our board would accept such a proposal. While this type of erratic and unpredictable behaviour is consistent with what we have come to expect from Microsoft, we will not be bludgeoned into a transaction that is not in the best interests of our stockholders.”

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive