Seven accuse company of bungling bid
Yahoo Inc. is facing seven shareholder lawsuits alleging the slumping Internet pioneer bungled its response to Microsoft Corp.’s unsolicited takeover bid.The Sunnyvale-based company provided a breakdown of the suits in an annual report filed Wednesday with the Securities and Exchange. The documents didn’t provide any new information about Yahoo’s attempts to shoo away Microsoft, which is threatening to pursue a hostile takeover unless a friendly deal can be negotiated. Yahoo’s board believes Microsoft’s offer, originally valued at $44.6 billion, is insufficient. Microsoft, though, has stood firm and is now preparing to overthrow Yahoo’s 10-member board, which includes the company’s co-founder and chief executive, Jerry Yang. Microsoft faces a March 14 deadline to nominate an alternate slate of directors. The impasse has triggered four shareholder suits in California’s Santa Clara County Superior Court. Three other complaints have been filed in Delaware by pension funds that own Yahoo’s stock. Five of the suits allege Yahoo’s board breached its duty by spurning Microsoft without trying to negotiate a better deal, according to the annual report. The two other suits allege Yahoo unfairly favored Microsoft’s “inadequate” bid even though the board eventually turned down the original cash-and-stock offer of $31 per share. Because Microsoft’s stock price has declined by 13 percent since the pursuit of Yahoo began, the bid is now worth $28.94 per share, or about $40 billion. Since its Feb. 11 rebuff of Microsoft, Yahoo has been exploring other options that would provide its shareholders with a better payoff than Microsoft’s proposed takeover. The other possibilities have included combining forces with News Corp.’s online hangout MySpace.com, or forming an advertising alliance with Internet search leader Google Inc., whose success spurred Microsoft’s takeover bid. Most analysts still believe Microsoft will end up buying Yahoo. While trying to escape Microsoft, Yahoo also has been laying off workers in an effort to boosts its sliding profits. The annual report didn’t provide any further specifics about the purge, which began Feb. 11. Management has previously estimated Yahoo will eliminate 1,000 jobs, or about 7 percent of its work force.