Chinese Internet firm Alibaba is speeding up the buyback of its stake owned by Yahoo Inc, as Microsoft Corp threatens to go hostile with a lower bid for Yahoo.

Microsoft Corp. has sent a letter on April 5 to the Yahoo Board of Directors setting a three-week deadline for moving forward on its buyout offer. It also said if the deal isn't reached by April 26 it will launch a hostile takeover at a less attractive price.

Internet icon Yahoo Inc. replied formally on Monday that it doesn't oppose a deal with the world's largest software maker but wants a better offer.

We are not opposed to a transaction with Microsoft if it is in the best interests of our stockholders, Chief Executive Jerry Yang and Chairman Roy Bostock said in a letter to Microsoft CEO Steve Ballmer.

A person familiar with the Chinese firm's plans said Alibaba wants to fund a buyback of all or part of the 39 percent stake Yahoo owns. Analysts said foreign and local financial investors might join the deal together, including Chinese pension funds or state-backed firms looking to enter the Internet sector.

Jack's number-one thing is to maintain control, said Hany Nada, managing partner of Granite Global Ventures, an early institutional investor of Alibaba, referring to Alibaba's Chief Executive Jack Ma.

Alibaba is China's biggest E-commerce company which takes 70 percent share of China's B to B market. The Company said it has the 'right of first offer' on the stake as it has stated in a 2005 agreement with Yahoo.

But the explanation of Alibaba's 'right of first offer' might be challenged by Microsoft even if the Chinese firm gets its shares. A lawyer said the 'right of first offer' need be accepted by New York State's law and may mot apply to the situation.

Yahoo and Microsoft has yet to issued any comment about Alibaba to date.