Bloomberg is reporting that a recently unsealed court case by shareholders against Yahoo reveals that Microsoft offered $40 a share for the Internet search company in January 2007 and Yahoo turned it down.
You have to wonder why Yahoo would turn that down. You also have to wonder why they said previously that Microsoft offered less than that. Perhaps this Computerword article has some insight into this. The blame seems to lie with Jerry Yang:
“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. They claim that Yang “used that power to delay, to refuse to negotiate in good faith and to erect roadblocks,” the complaint reads.”
Well that sucks if you’re trying to negotiate a deal in good faith. No wonder Carl Icahn wants to dump the board. But before he does that, perhaps he should read this story. It looks like Yahoo has a “severance plan” that would cost Yahoo over $2 billion if he decides to dump the board:
“Under Yahoo’s employee severance plans, full-time employees are eligible for severance if they are terminated, wish to resign for a “good” reason, or have their jobs and duties substantially changed within two years after Yahoo undergoes a change in control. A buyout of the company, or a proxy fight where a majority of the existing board is replaced, constitutes a change in control, attorneys say.”
That makes Yahoo look very unattractive to any potential buyer.
It will be interesting to see how Icahn responds to this.