Yahoo Poison Pill Worked

Microsoft-Yahoo saga Deal Off For Benefits Package

SAN FRANCISCO

A Delaware judge has unsealed court documents containing new details about Yahoo Inc.’s efforts to ward off Microsoft Corp.’s unsolicited bid to buy the Internet pioneer.The documents, made available Monday over Yahoo’s objections, shed new light on an employee severance program that would have driven up Microsoft’s expenses in a successful takeover. The records were obtained as part of a shareholder lawsuit filed against Yahoo’s board for resisting Microsoft’s overtures.

Based on Yahoo’s internal estimates, the severance plan would have added $462 million to $2.1 billion to Microsoft’s costs, based on the software maker’s initial offer of $44.4 billion, or $31 per share.Microsoft last month orally offered to raise its bid to $47.5 billion, or $33 a share, before withdrawing the bid in a disagreement over price.The shareholder lawsuit alleges Microsoft could have afforded to bid more if Yahoo hadn’t adopted such a generous program covering all 13,800 of the company’s employees in the event of a takeover.

Why is this not being called what it is? It’s a poison pill. Companies have been doing it for years but here is the problem Yahoo has. The shareholders are trying to unlock the value the company has embeded in it’s properties and to imagine this whole deal came down to this is going to mean one huge, fat, hairy shareholder lawsuit (not that there wasn’t going to be one anyway) so Jerry Yang better get used to court apperances cause this is going to be an interesting summer boys and girls.