Two Detroit pension funds filed suit against Yahoo Inc. and its directors for opposing a 62% premium takeover offer from Microsoft Corp. and keeping shareholders from realizing the maximum available value through the deal, according to the complaint. The suit, filed Thursday in Delaware Chancery Court, seeks class-action status.
Instead of exploring the Microsoft offer, Yahoo officials have been pursuing potential alternative deals destructive to shareholder value, the lawsuit states. None of the long-term strategies that Yahoo pursued as an alternative to a combination with Microsoft have panned out, the 36-page suit stated. In fact, the companys financial condition has worsened, its stock performance weakened.
The $4.3 billion Detroit Police & Fire Retirement System and the $3.8 Detroit General Retirement System seek an order declaring that defendants breached their fiduciary duty by refusing to consider the offer. Plaintiffs also seek an order to rescind any Yahoo poison pill anti-takeover measure and prevent Yahoo directors from initiating any defensive measures that would make an acquisition harder or more expensive. The suit also seeks to invalidate Yahoo severance plans.
The law firm of Bernstein Litowitz Berger & Grossmann is representing the Detroit funds. Tracy Schmaler, Yahoo spokeswoman, didnt respond for comment by publication time.