"Yahoo’s board of directors plans to reject Microsoft’s $44.6 billion hostile bid with a letter Monday saying the offer undervalues Yahoo, a person familiar with the matter said Saturday.

The decision to reject the bid was taken following a board meeting Friday in which directors explored ways in which to respond to Microsoft’s week-old bid. The board heard presentations from Yahoo’s management and its bankers, according to people familiar with the discussions. Several people argued that the company was worth more than what Microsoft offered, this person said.

The board was also presented with various options for maintaining Yahoo’s independence, including an advertising partnership with Google that could improve Yahoo’s bottom line, this person said.

Lawyers at the meeting discussed the antitrust implications of a tie-up with Google, as it would extend that company’s dominance of the search advertising market, the person said. They also discussed how to press Microsoft to increase its bid.

Yahoo declined to comment on Saturday. Yahoo said earlier in the week that its board was evaluating Microsoft’s offer and other alternatives."

Labels: microsoft, yahoo

¶ posted by Jimmie Geddes, Editor @ 2/09/2008 03:47:00 PM