Yahoo is trying to shield information about the cost of employee severance plans that the plaintiffs want to eliminate and information about Yahoo's strategic planning prior to Microsoft's bid, according to the plaintiffs' letter.NEW YORK (Reuters)
- Investors suing Yahoo Inc over its rebuff of Microsoft Corp's $47.5
billion buyout bid have filed a new case that adds company co-founder
David Filo as a defendant, but they say much of their complaint is
being kept under seal at Yahoo's demand.
The lawsuit previously named the Internet company and its board as
defendants. In an amended version, the plaintiffs have sued the board
and Filo, who is not a director, saying they failed to respond in good
faith to Microsoft's offer. The company itself is no longer a defendant.
The complaint, filed in Delaware Chancery Court by two Detroit
pension funds that hold Yahoo shares, was edited by the company, which
wants parts to remain confidential. Numerous portions of the 47-page
lawsuit were omitted in the publicly filed version, which was dated
Thursday.
Yahoo spokeswoman Diana Wong on Friday declined to comment on the lawsuit.
Lawyers for the shareholders say the full complaint should be made
public, and they sent a letter to Chancellor William Chandler on Friday
of the Delaware court requesting a hearing on the matter.
"These redactions are hiding neither trade secrets nor state
secrets," said Mark Lebovitch, a partner at law firm Bernstein Litowitz
Berger & Grossmann LLP who represents the plaintiffs. "They are
hiding evidence of the Yahoo board's improper actions in response to
Microsoft's offer. They are hiding evidence of breaches of fiduciary
duty."
Yahoo is trying to shield information about the cost of employee
severance plans that the plaintiffs want to eliminate and information
about Yahoo's strategic planning prior to Microsoft's bid, according to
the plaintiffs' letter.
Many Yahoo shareholders are unhappy over the Silicon Valley
company's refusal to accept Microsoft's bid. Financier Carl Icahn on
Thursday launched a campaign to replace the board with directors who
would reopen talks with the software maker.
The shareholder lawsuit was originally filed in February by the City
of Detroit's Police and Fire Retirement System and General Retirement
System, seeking to block Yahoo's board from implementing defensive
measures that would make the company unattractive to potential buyers.
If there is no other remedy, the plaintiffs say they will seek monetary
damages.
Microsoft, which wanted to buy Yahoo to better compete with Google
Inc in the lucrative online advertising market, walked away from the
negotiations earlier this month when Yahoo rejected its offer of $33 a
share.
The shareholder lawsuit contends that Yahoo Chief Executive Jerry
Yang conspired with Filo on how to maintain Yahoo's independence in the
face of Microsoft's offer because they had personal interests in
keeping Yahoo a stand-alone company.
Filo and Yang are Yahoo's biggest inside shareholders, although
collectively they hold just under 10 percent. Filo owns 5.85 percent of
Yahoo shares, while Yang has 3.95 percent. The two founded the
pioneering Web company while students at Stanford University in 1994.
In early May, Yang and Filo met Microsoft CEO Steve Ballmer in
Seattle, where they communicated that Yahoo's board wanted $37 a share.
Microsoft then ended the talks. The stock had traded around $19 prior
to Microsoft's bid.
"There was no good reason for the board to place David Filo -- who
together with Jerry Yang represented the two greatest threats facing
Yahoo shareholders following Microsoft's bid -- at the center of
negotiations," Lebovitch said.
(Additional reporting by Eric Auchard in San Francisco; Editing by Derek Caney)
© Thomson Reuters 2008 All rights reserved
