Yahoo board of directors decided at a meeting Friday to reject Microsoft's $44.6 billion offer for the company, a person familiar with the situation confirmed to the Mercury News.

The decision, first reported by the Wall Street Journal, was reached because the board believes the $31 per share offer "massively undervalues" the Sunnyvale company and that it is unlikely to consider any offer below $40 per share, the Journal reported. Yahoo will officially deliver the rebuff in a letter to Microsoft on Monday morning before the stock markets open.

The anonymous source also told the Journal that the board believes the bid, which represented a 62 percent premium over Yahoo's closing price on Jan. 31, doesn't reflect the risk that Yahoo would be taking if it entered into an arrangement that could be overturned by antitrust regulators.

Yahoo has been (more...)