NEW YORK (Bloomberg) - Yahoo! Inc. shareholders would rather take Microsoft Corp.'s current takeover offer than watch the world's largest software company walk away from the deal, a Piper Jaffray & Co. analyst said.

The majority of 20 institutional shareholders surveyed told Piper Jaffray they prefer Redmond, Washington-based Microsoft's bid to no deal, analyst Gene Munster said on Monday in a note to investors. The offer was valued at $44.6 billion, or $31 a share, in cash and stock when it was announced February 1. As of yesterday's close, the value had fallen to $29.36 a share.

Yahoo, owner of the most visited US website, insisted on a higher offer in a letter yesterday to Microsoft CEO Steve Ballmer. Ballmer has given Yahoo three weeks to reach a deal and threatened to nominate a rival slate of board members at its annual shareholder meeting. This proxy contest may lead to a lower bid, he said.

"We believe that Yahoo does not have alternative options to satisfy investors and that the deal fairly values Yahoo," Minneapolis-based Munster said in the note. The Yahoo deal is "inevitable" at the current price, he said.

Mr. Munster lowered his price target for Yahoo to $31 from $33 after the survey.

Yahoo, based in Sunnyvale, California, fell 15 cents to $27.55 at 11.42am New York time in Nasdaq Stock Market trading. The stock had climbed 19 percent this year before yesterday. Microsoft dropped 35 cents to $28.81.

Microsoft shares have fallen about 11 percent since the bid, reducing the value of the half-cash, half-stock proposal.