Microsoft said its $44.6 billion offer to purchase Yahoo is "fair" and hinted that it may pursue a hostile takeover of the Internet company, according to a statement Microsoft made Monday in response to Yahoo's formal rejection of its buyout offer.

In a statement, Microsoft said it's "unfortunate" that Yahoo "has not embraced" its proposal to combine the two companies, and the rejection of the offer "does not change our belief in the strategic and financial merits of our proposal."

The company also hinted that it may take the offer directly to Yahoo's shareholders, a move that could result in a hostile takeover.

"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," Microsoft said in its statement.

Earlier Monday, Yahoo formally rejected Microsoft's bid to acquire the company in a half-stock/half-cash purchase, saying it undervalued Yahoo.

On Feb. 1, Microsoft offered to pay $31 per share for half of Yahoo's outstanding shares in cash -- about $22.3 billion -- and 0.9509 of a Microsoft share for the other half. Microsoft's half-cash/half-stock offer to Yahoo was valued at about $44.6 billion at the time it was made; Yahoo's share price was $19.18 at the time.

However, since then Microsoft's stock has gone down while Yahoo's has risen, making the deal, under its current terms, worth less than when it was originally offered. This led to speculation that Yahoo might look for other suitors; the company is reportedly looking for about $40 per share. Yahoo's share price closed at $29.87 Monday; Microsoft's closed at $28.21.

Some have speculated that Microsoft would raise its offer to the company to about $35 per share -- about midway between its original offer and Yahoo's target price -- but in its statement on Monday, the company seemed adamant about keeping the offer as it stands.

"We are offering shareholders superior value and the opportunity to participate in the upside of the combined company," Microsoft said. "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."

Microsoft's offer to purchase Yahoo is an attempt to join forces and improve both companies' positions against Google in online advertising and services. However, many questioned both the logistical complexity and cultural differences involved in combining the companies, and there are fears that it will thwart rather than help their efforts to compete with Google.

Yahoo is reportedly in talks with both AOL and Google to try to avoid being acquired by Microsoft. Analysts said Monday that Yahoo's initial rejection of the offer is more of an attempt to elicit a higher bid -- either from Microsoft or another company. If none comes, the company might decide in the future to accept Microsoft's offer as it stands, they said.