At 11 o’clock Saturday night, Yahoo heatedly rejected a “joint proposal” made by Microsoft and corporate raider Carl Icahn the night before that would give Microsoft Yahoo’s search business, oust the Yahoo board and current management and give Icahn control over what’s left.

In the statement Yahoo put out, chairman Roy Bostock said, “After negotiating among themselves without the involvement of Yahoo!, Carl Icahn and Microsoft presented us with a ‘take it or leave it’ proposal under which we would be required to restructure the company, hand over to Microsoft Yahoo!’s valuable search business and to Carl Icahn the rest of the company, giving us less than 24 hours to respond. It is ludicrous to think that our board could accept such a proposal. While this type of erratic and unpredictable behavior 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.”

In response to the Microsoft/Icahn bid Yahoo said that it offered to sell Microsoft the whole company “for at least $33 per share.”

It said the transaction “could be negotiated and executed prior to August 1,” the date of the Yahoo stockholder’s meeting and the showdown with Icahn for control of the company.

Yahoo said it “also offered to negotiate an improved search-only transaction” but “Microsoft rejected both offers.”

Yahoo allowed that this time through Microsoft’s offer for its search operation was sweeter than the last time but that Microsoft and Icahn wouldn’t negotiate the “fundamental terms” of their proposal, a position consistent with Microsoft’s latest posture on Yahoo.

In a statement of its own last Monday July 7 Microsoft said that it had concluded that it could never negotiate any deal with Yahoo’s current management and board.

It then threw its support behind Icahn’s proxy fight and said it “would be interested in discussing with a new board a major transaction with Yahoo, such as either a transaction to purchase the ‘Search’ function with large financial guarantees or, in the alternative, purchasing the whole company.”

Microsoft wouldn’t name a price but said it was ready to “enter into discussions immediately after Yahoo’s shareholder meeting if a new board is elected.”

Bostock last night called Microsoft’s refusal to deal directly with Yahoo’s management “completely absurd and irresponsible given the complexity of the deal – one that requires the removal of half of Yahoo!’s business from Yahoo! and then the integration of it into Microsoft.”

Yahoo characterized the search-only deal as complex and risky, leaving its remaining non-search businesses in the hands of Icahn’s slate of directors, “which has virtually no working knowledge of Yahoo’s businesses” and destabilized “for the up to the one year it would take to gain regulatory approval.”

It also said that it could spin off its Asian assets and return cash to stockholders – a component of the Microsoft/Icahn proposal – on its own without selling its search business to Microsoft.

Bostock claimed that “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.”

Here is the full text of Yahoo’s statement: