(02-09) 10:38 PST SUNNYVALE — Yahoo Inc.’s board plans to spurn Microsoft Corp’s $44.6 billion merger proposal, a source familiar with the matter said this morning.

The rejection, to be officially delivered to Microsoft on Monday, adds a dramatic twist to the takeover saga, which would combine two technology industry giants.

The decision by Yahoo keeps the Sunnyvale company independent, at least for now. In the past, executives made no secret of their desire to keep the company intact, but disappointing earnings and a depressed stock performance have made their Web portal an enticing acquisition target.

Yahoo’s board, which met Friday, has determined that the $31 per share offer Microsoft made is inadequate. The Wall Street Journal reported in its online edition today that the board is holding out for at least $40 per share, which would increase the overall value of the proposal by $12 billion.

E-mail Verne Kopytoff at vkopytoff@sfchronicle.com.

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