SUNNYVALE, Calif., May 16 (UPI) -- Yahoo! Inc. Chairman Roy Bostock denied the company's board acted irrationally when it rejected a purchase offer from U.S. software giant Microsoft Corp. (NASDAQ:MSFT)

Activist investor Carl Ichan, who has formally initiated a proxy fight to replace all 10 of Yahoo!'s board members, had said Yahoo! board "acted irrationally" when it turned down Microsoft's offer, The New York Times (NYSE:NYT) reported Friday.

Ichan said it was "unconscionable" for the board to turn down an offer "that represented a 72 percent premium over Yahoo's closing price of $19.18 on the day before the initial Microsoft offer."

Bostock rebuffed Ichan's accusations Thursday. " We do not believe it is in the best interests of Yahoo! stockholders to allow you and your hand-picked nominees to take control of Yahoo! for the express purpose of trying to force a sale of Yahoo! to a formerly interested buyer who has publicly stated that they have moved on," Bostock said.

But, hedge fund manager John Paulson, who owns 3.6 percent of Yahoo! said he would back Ichan's initiative to replace board members and invite Microsoft back to sale negotiations.