Prof. Bainbridge analyzes here the applicable standard under Delaware corporate law that would apply to the defensive measures taken by Yahoo to spurn the advances of Microsoft. He explains why the case of Blasius v. Atlas Corp. would not apply. Blasius imposes a heightened standard of review when the shareholder franchise is interfered with by the board. Yahoo amended its bylaws in reply to Microsoft’s bid so that the date by which nominations for board members had to be submitted was delayed until 10 days after the announcement of the annual meeting (which has not been announced yet.) Professor B. explains that the Delaware Supreme Court’s decision in Stroud v. Grace supports the argument that the standard announced in Delaware Supreme Court opinion in Unocal, and not the Blasius standard, should apply in the "Microhoo" situation where the primary purpose in any changes that impacted the shareholder franchise was related to a defense to a takeover attempt.
Prof. Ribstein has also provided several insightful posts on the situation, e.g., here.
Although not nearly as scholarly as the good professors, I was quoted here by the San Francisco Chronicle in an article in today’s edition that addressed the same issues about the standards that would apply to Yahoo’s actions (or inactions).