Why can't they just say "no"?

Because the Yahoo board doesn't own the company. They only make decisions on the best interest of the shareholders.

And even though some of the directors, executives and employees (the insiders) may not like the deal they do not own the majority of the shares of company (over 70% of the company is owned by outsiders like small investors,mutal funds etc...according to http://finance.yahoo.com/q/mh?s=YHOO).

Let me rephrase: what would happen if they simply said "no"?

They would be sued by their shareholders for breach of fiduciary duty.

Let me ask you, why should they say no?