NEW YORK (Reuters) - Yahoo Inc on Monday rejected Microsoft Corp's unsolicited takeover bid, currently valued at $42 billion, as too low, saying its board had unanimously concluded it was not in the best interests of shareholders.

In a statement, Yahoo said the offer "substantially undervalues" the company.

Microsoft made the half-stock, half-cash offer on February 1. It was originally worth $44.6 billion or $31 per share -- a 62 percent premium to Yahoo's stock price. Since then, Microsoft shares have fallen and the deal is now worth $41.8 billion.

If completed, a merger of Microsoft and Yahoo would be the world's largest of two computer technology companies and would create a formidable rival to Internet search and advertising leader Google Inc .

(Reporting by Megan Davies; editing by John Wallace)
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