Microsoft waiting for formal rejection from Yahoo

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The difficulty reportedly centered on a desire by Jerry Yang, Yahoo chief executive and co-founder, to find an alternative to selling to Microsoft, according to reports. Yang reportedly had the support of fellow directors Eric Hippeau of Softbank, an early Yahoo investor, and Robert Kotick, chief executive of Activision.

But a source familiar with Yahoo said: "Nothing could be further from the truth." This source noted that differences of opinions occasionally emerge, as they would on any board, but there is no strong division forming on the company's board.

Yahoo's board is moving as rapidly as possible in assessing its options and taking as long as needed to come to a conclusion, the source said, noting that the March 14 deadline for shareholders to file for an opposition slate will not speed up that decision-making process.

Microsoft has previously indicated it is willing to take whatever means is necessary to ensure Yahoo's investors have an opportunity to consider its buyout offer. The deadline for Microsoft, or any other shareholder, to present its slate of opposition candidates to Yahoo's board of directors is March 14.

Typically, in hostile takeover attempts, the buyer will not only launch a proxy fight to get its slate of opposition directors elected, but also announce a tender offer, proxy solicitors say.

A tender offer calls on investors of the target company, such as Yahoo investors, to agree to tender their shares to the prospective buyer. Once that buyer gets its slate of opposition directors elected, those directors would change the bylaws to remove the "poison pill"--an antitakeover policy that makes it prohibitively expensive for hostile buyers to gain ownership in the target company above a certain threshold. Yahoo's 10 directors are up for re-election on an annual basis.

CNET News.com's Elinor Mills and Ina Fried contributed to this report.