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Unsealed Shareholder Complaint Puts More Pressure On Yahoo

A Delaware court unsealed a complaint filed by Yahoo shareholders claiming that a severance plan adopted by the Web giant was designed to quash Microsoft's $44.6 billion bid. The severance plan, sometimes called a "poison pill" would have made it more lucrative for Yahoo employees to walk out on the company after a Microsoft takeover. The move would have added between $462 million and $2.1 billion to Microsoft's costs, based on its offer of $44.6 billion, or $31 per share.

In the complaint, shareholders alleged that Yahoo was "throwing sand in the gears of Microsoft's plans for a smooth integration." They also accused Yahoo Chief Executive Jerry Yang of "defensive and self-interested conduct" and trying to "thwart Microsoft's advances at shareholders expense." These allegations could add weight to investor activist Carl Icahn's bid to overthrow the Yahoo board. Icahn has filed a proxy slate with the stated goal of bringing both sides back to the negotiating table.

Interestingly enough, the unfurled court documents reveal that also Microsoft offered $40 per share to buy Yahoo in January 2007 -- a price that Yang and co. could only dream about now -- but the bid was rejected by then-CEO Terry Semel in a board-authorized letter stating that Yahoo would be open to some kind of commercial partnership.

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