14 DAY TRIAL // Yahoo! has been sued by two Detroit public pension funds because it allegedly acted against shareholders' interest when it raised its tail and said "No!" to Microsoft. "Yahoo's directors cannot 'just say no' indefinitely to legitimate acquisition offers when the effect of that decision is to deny shareholder choice in the face of non-coercive and economically beneficial bid - especially where, as here, the bid may yet be improved through negotiations," the lawsuit reads.
Asked for a comment, a Yahoo! spokeswoman said that her company had no official stand on that yet. The suit was filed on the 21st of February before the Delaware Chancery Court and it seeks class action status. Bad news for the Sunnyvale-based company all the way, as it finds itself between the hammer and the anvil. It cannot fend off the hostile takeover looming over, News Corp. is interested but under specific terms and conditions and, in the meanwhile, the shareholders have started voicing their concerns.
"The Yahoo board, in its desperation to pull off a 'Just say no to Microsoft' defense, is fighting off a non-coercive 62% premium offer by pursuing all manner of value-destructive third party deals," the lawsuit said.
Furthermore, the public pension funds for Detroit Firefighters and police officers and another for Detroit public employees complained that the decision was based solely on the bias against Microsoft instead of a rational evaluation of the proposal. "The Yahoo board members have placed personal distaste for Microsoft ahead of shareholder welfare. The Yahoo board's supposed commitment to 'consider' Microsoft's proposal appears to have been a hollow promise."
This is the second lawsuit Yahoo! has been involved in this month, due to the fact that it turned down the Redmond-based company's unsolicited bid. Earlier, another shareholder, the Wayne County Employees' Retirement System, also pursued legal action against the Internet giant.