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Reuters : Yahoo board may be duty bound to accept Microsoft deal

By Andrew Redfern @ 15th February 2008 5:50 pm

Analysis published by Eric Auchard of Reuters

Yahoo Inc’s board seems to be looking for any way possible to escape takeover by Microsoft Corp but in the end directors’ duty may be simply to take what the software company offers.

The pioneering Web company may be known for its fun-loving culture where employees refer to each other as “yahoos”, dress in loud purple-and-yellow T-shirts and harbor a deep Silicon Valley-bred distrust of rival Microsoft’s corporate culture.

But Yahoo’s 10-member board is far from being some band of Microsoft-hating ideologues that would block a deal with the world’s largest software company at any price.

Most of the board directors at Sunnyvale, California-based Yahoo are drawn from the mainstream of American corporate life, including executives and entrepreneurs from fields such as advertising, airlines, supermarkets and radio.

And in a world of heightened focus on corporate boards, directors are under clear pressure to seek the best deal for shareholders, suggesting their fiduciary responsibility will prevail over any bet-the-farm strategy to remain independent.

“You can’t say ‘No’ to Microsoft’s offer based on some intangible vision,” said Clayton Moran, an analyst with Stanford Group in Houston.

Microsoft’s original cash-and-stock offer of $44.6 billion, or $31 per share, was a more than 60 percent premium to Yahoo’s stock price. The offer value has since shrunk to about $42 billion — still a substantial premium.

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