Yahoo sued for spurning Microsoft

Two Detroit pension funds have sued Yahoo Inc. and its board of directors, saying they breached their duties to shareholders in trying to thwart a takeover by Microsoft Corp.

According to the lawsuit, Yahoo's board is pursuing "value-destructive" third-party deals in an effort to fight off Redmond, Wash.-based Microsoft, which on Feb. 1 announced a takeover bid of $31 per share in cash and stock, a 62 percent premium over Yahoo's previous day's closing price.

Sunnyvale, Calif.-based Yahoo, whose shares closed unchanged at $28.42 on Friday, rejected Microsoft's $44.6 billion takeover bid as inadequate, but indicated that it might be willing to negotiate if the price was right. Yahoo is believed to want at least $40 per share, or about $56 billion.

The company also adopted new severance packages that would protect employees in the event of a Microsoft takeover, a move the lawsuit labels as a blatant effort to drive up the cost of an acquisition.

"Yahoo's directors cannot 'just say no' indefinitely to legitimate acquisition offers," the lawsuit reads. "Likewise, Yahoo's directors cannot pursue transactions that do not require shareholder approval for the primary purpose of making Yahoo unattractive to Microsoft."

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Comments

• Anonymous
  February 26, 2008
  Yahoo seems to think it's a lot better than it really is. I taught Internet clases for a community college(on a network, intranet, etc.) and I was forced to use Yahoo. Gliches to beat the band, difficulty signing in, downtime, Spam not caught, etc etc. They should call it "DaWho?" as far as I'm concerned.  It was a thrill to think that Bill Gates and crew would take over the miserable mess and fix it, as they surely would.   Money aside,Yahoo should get their act together; the more computer literate people become, the fewer users they will have. Bethwin