Yahoo announced Tuesday it has bought Internet video syndication specialty firm Maven Networks for approximately 160 million dollars. The acquisition comes a day after Yahoo rejected a 44.6-billion-dollar takeover bid by Microsoft on the grounds the offer "undervalues" the online search company.

Yahoo and Maven were apparently negotiating the deal before Microsoft made its offer for Yahoo on February 1.

Maven specializes in online video publishing, syndication and, most importantly, advertising. The start-up bills itself as being "synonymous with Internet television."

Yahoo says it bought Maven to improve content and advertising in online video services.

Microsoft to raise offer?

In the meantime, Yahoo's second-biggest investor urged Microsoft to raise its $42 billion bid for the Web pioneer and warned Yahoo it has few options left, raising the pressure on them to seal a deal.

In a quarterly letter to investors released on Tuesday, Bill Miller, the star stock-picker at U.S. asset manager Legg Mason Inc , estimated fair value for Yahoo to be near $40 per share, versus Microsoft's original offer of $31 per share.

Microsoft "will need to enhance its offer if it wants to complete a deal," Miller wrote in a February 10 letter, according to a Reuters report, one day before Yahoo formally rejected Microsoft's plan for the company.

Miller's comments came as major institutional Yahoo shareholders have been working behind the scenes to get the parties to strike a deal, analysts say. Around 53 of the top 100 big funds in Yahoo hold shares in both companies, according to the most recent shareholder data available from September.