Yahoo prepared a "poison pill" for Microsoft
Yahoo has failed in its legal action to keep internal communications related to the unsuccessful takeover by Microsoft secret. Judge William Chandler from the Court of Chancery in Delaware ruled (PDF) that Yahoo had not shown sufficient grounds to prevent the release of the court documents. This has meant that information on the legal action filed by two pension fund shareholders in Yahoo can now be published on the internet – PDF.
According to the legal action, the Yahoo board agreed to adopt an anti-takeover strategy on 12 February that would have provided compensation in the form of cash and shares for all 13,800 Yahoo employees if they were dismissed or relocated to another job within two years of a takeover by Microsoft. This "poison pill" would have meant several hundred million dollars in additional costs for Microsoft. The claimants claim that Microsoft would have been able to increase its offer if the anti-takeover programme had not been adopted. Instead, Microsoft withdrew its offer of $47.5 billion at the beginning of May.
The documents also show that Yahoo was planning its defensive moves months before the Microsoft offer became public. They also reveal that CEO Jerry Yang, with the backing of the board of directors, had asked for a press release to be written in October 2007 warning that any takeover would be rejected. The claimants, who want to force another legal investigation into the Microsoft offer, are trying to show that Yahoo was never interested in doing a deal with Microsoft.