Shareholder lawsuit claims Yahoo derailed Microsoft bid

Complaint chock-full of blistering allegations, internal Yahoo documents, e-mails and blow-by-blow accounts underhand maneuvers

Yahoo has lost a battle to keep information about its operations confidential after a judge decided to unseal documents filed by shareholders suing the company over its handling of Microsoft's unsolicited acquisition offer.

Delaware Chancery Court Judge William Chandler ruled on Monday that the court shouldn't keep documents such as the plaintiff's complaint under seal, despite Yahoo's arguments to the contrary.

Now, the complaint and the judge's decision have become available on the Web on the site of Bernstein Litowitz Berger & Grossmann, a law firm representing the plaintiffs.

The 64-page complaint is chock-full of blistering allegations, copies of internal Yahoo documents and e-mails and blow-by-blow accounts of what plaintiffs characterize as Yahoo bad-faith maneuvers. It will likely have a damaging public opinion effect on Yahoo, as the company battles other lawsuits and gets ready to face a proxy fight led by Carl Icahn to replace its board members in July. The complaint had been made available previously but with portions redacted.

"We're disappointed with the ruling in Delaware, but this is a routine legal matter and we're sure it won't have any impact on the outcome of the case, which we believe is without merit," said Yahoo spokeswoman Diana Wong.

The class-action lawsuit, filed in February on behalf of Detroit's Police & Fire Retirement System and General Retirement System, alleges that Yahoo's directors and top managers failed to look out for shareholders' best interests by rejecting Microsoft's offer.

The plaintiffs allege that directors and top managers, including co-founder and CEO Jerry Yang, actively tried to derail Microsoft's efforts to negotiate a mutually beneficial acquisition agreement. The complaint places much of the blame on Yang, describing him as someone with a "well-known" antipathy toward Microsoft who acted out of a personal interest to keep Yahoo independent.

Meanwhile, the plaintiffs blame the directors for allegedly relying on Yang to lead the negotiations with Microsoft, but Yang instead "used that power to delay, to refuse to negotiate in good faith and to erect roadblocks," the complaint reads.

In particular, the plaintiffs take issue with Yahoo's change over employee severance plans, which the plaintiffs interpret as a way to scare Microsoft away from the deal, "throwing sand in the gears of Microsoft's plans for a smooth integration."

The severance plans, according to the complaint, reward employees "with rich benefits" if they quit as a result of the company getting acquired.

For example, the plans let all Yahoo employees resign "and pocket generous termination benefits at any time during the two years following a takeover" by claiming that their job duties and responsibilities were adversely altered, according to the complaint.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Juan Carlos Perez

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Tom Pope

Dynabook Portégé X30L-G

Ultimately this laptop has achieved everything I would hope for in a laptop for work, while fitting that into a form factor and weight that is remarkable.

Tom Sellers

MSI P65

This smart laptop was enjoyable to use and great to work on – creating content was super simple.

Lolita Wang

MSI GT76

It really doesn’t get more “gaming laptop” than this.

Jack Jeffries

MSI GS75

As the Maserati or BMW of laptops, it would fit perfectly in the hands of a professional needing firepower under the hood, sophistication and class on the surface, and gaming prowess (sports mode if you will) in between.

Taylor Carr

MSI PS63

The MSI PS63 is an amazing laptop and I would definitely consider buying one in the future.

Christopher Low

Brother RJ-4230B

This small mobile printer is exactly what I need for invoicing and other jobs such as sending fellow tradesman details or step-by-step instructions that I can easily print off from my phone or the Web.

Featured Content

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?