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Microsoft, together with Carl Icahn, has made a new joint offer for Yahoo’s search business, but Yahoo once again rejected Microsoft’s offer.

However, in a press statement released today, Yahoo also said it was now willing to sell the entire company to Microsoft at $33 a share:

Yahoo!’s Board points out that a transaction to acquire the whole company would be much more straightforward and involve far less risk than the new proposal or any similar alternative. The Board believes a whole company transaction could be negotiated and executed prior to August 1st. In rejecting the Microsoft/Icahn proposal, Yahoo! not only repeated its offer to sell the entire Company to Microsoft for at least $33 per share, but also offered to negotiate an improved search only transaction. Microsoft rejected both offers.

This is the same amount previously offered by Microsoft in May, which Yahoo rejected at that time. Yahoo’s behavior is very telling, as it shows that the company’s directors are dying to avoid Carl Icahn getting control over Yahoo and replacing its board of directors. But I can really understand that Microsoft doesn’t want to offer the same price for Yahoo anymore, because if negotiations will go in favor of MSFT, they could get YHOO for even less than $33 per share. On the other hand, it might also make sense for the software company to only buy Yahoo’s search division at this point of time.

In its official press release, Yahoo gave the following reasons for not accepting the proposal by Microsoft and Icahn:

The Board’s rejection of the proposal was based on a number of factors, including the following:

1. Yahoo!’s existing business plus its recently signed commercial agreement with Google has superior financial value and less complexity and risk than the Microsoft/Icahn proposal.

2. The Microsoft/Icahn proposal would preclude a potential sale of all of Yahoo! for a full and fair price, including a control premium.

3. The major component of the overall value per share asserted by Microsoft/Icahn would be in Yahoo!’s remaining non-search businesses which would be overseen by Mr. Icahn’s slate of directors, which has virtually no working knowledge of Yahoo!’s businesses.

4. The Microsoft/Icahn proposal would require the immediate replacement of the current Board and removal of the top management team at Yahoo!. The Yahoo! Board believes these moves would destabilize Yahoo! for the up to the one year it would take to gain regulatory approval for this deal.

Roy Bostock, Chairman of Yahoo! said, “This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo!’s stockholders in mind. Clearly, Microsoft, having failed to advance in search, is aligning with the short-term objectives of Mr. Icahn to coerce Yahoo! into selling its core strategic search assets on terms that are highly advantageous to Microsoft, but disadvantageous to Yahoo! stockholders. Yahoo’s Board of Directors will not allow that to happen. Yahoo!’s Board remains open to any transaction that delivers full value to our stockholders - we just do not believe such a transaction should be dictated by Microsoft and a single short-term investor.”

So, the Microsoft/Yahoo saga isn’t over for a long time yet.