More shareholders sue Yahoo board
The latest suit filed by two investment funds from Detroit accuses Yahoo’s board of adopting a “Just say no to Microsoft” approach that has led to “improper defensive measures” and negotiations with other firms that would be “destructive to shareholder value”.
Yesterday, lawyers asked the courts to consolidate the suit with several previous cases that all aim to prosecute Yahoo’s board for not acting in the interests of shareholders.
The latest legal action, launched on Friday by the Police & Fire Retirement System and General Retirement System of the City of Detroit, claimed that “rather than consider Microsoft’s offer in good faith, Yahoo’s board has taken various steps to defend against Microsoft, destroying or threatening to destroy shareholder value in the process”.
Shareholders have been angered by plans for generous severance packages approved by the Yahoo board last week that could cost a new owner as much as $1bn to implement, according to one estimate. The latest lawsuit seeks to invalidate the plans.
Yahoo’s board rejected Microsoft’s February 1 offer, which was 62% above its market value before the takeover bid and worth $44.6bn at the time, because they said it undervalued the company.
Microsoft, in the meantime, has not made a higher offer, but has recruited a firm that specialises in hostile takeovers, or “proxy” battles.
The move could see Microsoft select replacement directors for the Yahoo board, who would be favourable to the takeover and win shareholder approval.
Microsoft has until March 13, Yahoo’s annual deadline for board nominees, to put forward candidates.
A proxy fight is thought to be a last resort for Microsoft. A hostile takeover battle would be a lengthy process and upset many loyal Yahoo staff, who are used to working in a relaxed, Silicon Valley environment. It would also make integration of the two companies more difficult.
Speaking in public for the first time since the takeover offer, the Yahoo chief executive, Jerry Yang, told the Interactive Advertising Bureau conference yesterday that the deal had been a “galvanising force internally and externally”.
“Our board is spending a lot of time thinking about all the alternatives,” Yang said, according to Fortune magazine. “It’s something that we need to think through carefully.”
Yang also yesterday outlined a new advertising platform in development by Yahoo, dubbed Apex, that will centralise display, video, search and mobile advertising in one interface. He also announced the launch of Yahoo Buzz, an aggregation tool for users’ favourite content.
Source: Guardian
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