Shareholders who view Microsoft’s bid for Yahoo as a welcome exit from two years of falling stock prices have filed seven lawsuits against the company over its reaction to the deal.
Four lawsuits in California Superior Court and three more in the Delaware Court of Chancery take Yahoo to task for stiff-arming Microsoft’s $31 per share bid. Yahoo filed its 10-K annual report with the SEC, and revealed the active lawsuits taking place. Two of the California plaintiffs aren’t complaining about the deal being rejected, but that some of Yahoo’s board favored what those plaintiffs felt was a low-ball offer (emphasis added):
The complaints allege that the Yahoo! Board of Directors breached fiduciary duties in connection with Microsoft’s unsolicited proposal to acquire Yahoo!. The plaintiffs in two of the California lawsuits allege that Microsoft’s February 1, 2008 unsolicited proposal to acquire Yahoo! is inadequate and that the Yahoo! Board of Directors breached fiduciary duties by favoring Microsoft’s unsolicited proposal. The plaintiffs in the other California Lawsuits allege that the Yahoo! Board of Directors breached fiduciary duties by, among other things, failing to negotiate a transaction with Microsoft or other potential bidders in the past and presently.
Yahoo also has four other lawsuits hanging around since May 2007. Two of the four suits were consolidated into one complaint, which Yahoo believes is without merit and intends to defend vigorously:
The plaintiffs generally claim that Yahoo! issued false, deceptive or misleading statements concerning itsadvertising business, financial results, and sales and growth potential between April 8, 2004 and July 18, 2006.
The other two suits allege insider trading on non-public knowledge took place (emphasis added):
The derivative actions, which include allegations of substantially identical facts to the purported securities class action, attempt to state various claims under federal and California law for trading by defendants on alleged material non-public information, and allegations of breaches of fiduciary duties relating to financial reporting, misappropriation of information, abuse of control and waste of corporate assets.
