With the clock ticking and pressure mounting, Yahoo's board could decide as soon as next week whether to accept an unsolicited bid from...

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SAN JOSE, Calif. — With the clock ticking and pressure mounting, Yahoo’s board could decide as soon as next week whether to accept an unsolicited bid from Microsoft to buy the Sunnyvale, Calif., company for $45 billion.

The 10-member board of directors reportedly conferred by phone on Friday and scheduled an in-person meeting next Wednesday at Yahoo headquarters.

Yahoo declined to confirm the meeting, which was originally reported by a Web site owned by The Wall Street Journal.

“Time is of the essence,” said one investor who is closely following the proposed deal. “It is really important to get something done quickly.”

In the absence of a competing bidder, Yahoo’s board has few options: It can reject the offer outright, accept it or demand a higher price.

But a range of analysts and shareholder experts say an outright refusal is unlikely, given the hefty 62 percent premium Microsoft has offered to pay.

“An offer this strong does put the board under quite a bit of pressure,” said Kent Hughes, managing director of Egan-Jones Proxy Services, a shareholder-advisory service. Hughes said a typical premium in recent acquisitions has ranged from 20 to 25 percent.

Institutional investors who own 68 percent of Yahoo’s stock are hoping Microsoft will increase its offer. “At the end of the day, investors want the highest valuation possible,” said Pat McGurn, special counsel at RiskMetrics Group.

On Thursday, Masayoshi Son, chief executive of Japan’s Softbank, told reporters that Yahoo’s management should choose a response to Microsoft that does not reduce the company’s value. “If done properly, Yahoo’s brand value can increase as a result” of the bid, Son said.

But major investors with large stakes in both Yahoo and Microsoft are equally concerned about how the deal could affect Microsoft’s stock price, which has fallen almost 14 percent since the deal was announced.

On Friday, the New York Post reported Capital Research and Management, the largest outside investor in both Yahoo and Microsoft, met with Microsoft CEO Steve Ballmer to explore whether Microsoft might increase its bid and the impact that could have on Microsoft investors.

As of September 2007, Capital Research owned 151 million shares of Yahoo, or 11 percent, and 557 million shares of Microsoft, or 6 percent. It is the largest shareholder in Microsoft after Bill Gates.

The support of giant shareholders for the deal could be crucial if Yahoo’s board decides to reject the bid. In that case, Microsoft has until March 13 to nominate a new slate of directors for the board, which will be up for re-election at the next annual meeting.

As of September 2007, 11 financial institutions, including Microsoft’s banker Morgan Stanley, owned 42 percent of Yahoo’s stock. Microsoft itself can buy up to 14 percent without triggering a “poison pill” designed to thwart a takeover by making it prohibitively expensive.

Since the bid was announced on Feb. 1, experts say Yahoo’s shares appear to have been increasingly acquired by arbitrageurs who are in favor of the deal and want it to be done quickly. More than 750 million shares have changed hands, a number equivalent to more than half of Yahoo’s outstanding stock.