Microsoft deal may be a duty for Yahoo board

By Eric Auchard

SAN FRANCISCO (Reuters) - Yahoo's board seems to be looking for any way possible to escape takeover by Microsoft, 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 harbour 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 (22.7 billion pounds), 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.

Wall Street has grown convinced that Microsoft's price is an insurmountable hurdle to would-be rivals and that the search for alternatives by Yahoo's board is basically designed to exact a higher offer from the Redmond, Washington-based giant.