The inevitable shareholder lawsuits have started to be filed against Yahoo for not accepting Microsoft’s bid. Yesterday, the Wayne County Employee’s Retirement System of Michigan, was the first to file suit. The retirement fund owns 13,600 shares. You can expect more shareholders to pile on board, especially if this thing drags out.
In fact, that is not the only shareholder suit Yahoo is facing. On February 1, the day Microsoft made its recent offer, another shareholder lawsuit was filed against Yahoo in California for failing to accept Microsoft’s bid from the year before. They might want to amend that lawsuit to include Yahoo’s most recent rejection as well.
The more that Yahoo fights the merger, the more shareholder lawsuits will pop up. The reports in the media typically note how this is increasing the pressure on Yahoo. Nothing against Wayne County, but 13,600 shares is a tiny stake for an institutional investor. If bigger investors started suing, then the pressure would be noticeable. But big investors don’t sue, they vote their shares.
That’s just not fair. If Yahoo was looking to sell, that’d be one thing. But they rejected an UNSOLICITED offer. Now people have the right to sue them?
Well shit, I bid $300 billion for Microsoft. That’s $30 B above their market cap. Oh what you don’t want to sell me your company? Tough shit, I own 1 stock, now I sue you because I’m a greedy American bastard (God bless!)
Yeah, that makes perfect sense.
Yea the media definitely needs to be taken out of the equation. What Yahoo and Microsoft are doing right now is purely business. Company A proposes an offer to Company B, while party C sues Company B for not doing what they wanted. The longer this takes, the more speculation will occur and then there goes the value of EVERYBODY’s stock.
Yahoo really seems to be shit creek without a paddle these days. Not many people are happy with the decisions they made of late.
Fortunately, I’ve never liked Yahoo’s approach to anything, so I could care less what happens to them as a company.
It will be interesting to see how long they can delay the inevitable though; and I’ll have fun watching what kind of damage they do along the way.
heres a novel idea… shares are almost 30.00… they should sell.. dont blame yahoo! because you are too stubborn to sell now.
The fund owns 13,600 shares, that is such a small percentage. Laughable…
The issue is yahoo share price was around 19$ a share before microsoft’s offer. yahoo has around 12$ per share worth of cash on its balance sheet. That means the market valued its operations at only 7$ per share !!!
Microsoft’s offer of 31$ translates to close to 19$ a share for the operations. Almost 200% premium and the board says it is undervaled..
Yang and their board are letting their greedy egos overtake common sense.
I wonder what their side plan is now that this is all adding up. http://www.tags...s-Against-Yahoo
@Erick
You’re right, larger shareholders vote their shares. Small shareholders votes don’t carry enough weight on their own so filing suit is the only way they CAN BE HEARD.
The fund is filing a lawsuit for getting $2 per share over the current market price ? (actually MS offer is worth lesser beause of current price of MSFT).
ie, the positive outcome of lawsuit is worht less than $26,000 for the fund ! Who is paying for the lawsuit ??
haha good point Tej, very good point
With the current lawsuit filers owning 13,600 shares, and Yahoo having 1.39 billion outstanding shares, they own .00000987% of the company…seems like they should definitely be making important decisions for the worlds biggest website.
Like so many shareholders, this small shareholder doesn’t understand what it means to be a shareholder. When you have shares, even if it’s just 1 share, you effectively OWN a part of the company. You can then go to all shareholder meetings, have your say there, and get full disclosure of the financial reports.
So basically they’re suing their own company. That’s like shooting in your own foot. Not very smart. Just sell your shares if you don’t want to own the company anymore.
@Sean “Well shit, I bid $300 billion for Microsoft. That’s $30 B above their market cap. Oh what you don’t want to sell me your company? Tough shit, I own 1 stock, now I sue you because I’m a greedy American bastard (God bless!)”
what are you? Retarded? do you even have $300 billion for that kind of offer….MS has….so that offer is very valid….and board of Yahoo has a responsibility to provide the best return to their shareholders…..call them greedy, but last time I checked no investor was investing in anything for charity…..So if Yahoo doesn’t have a better option than getting bought by Microsoft and they let the offer slide (solicited or unsolicited) they are bound to get sued……
As a legal matter, this kind of stuff is non-story. These kind of lawsuits are rarely, if ever, successful. The board is given huge deference in business matters. All these do is generate legal fees for both sides.
It’s not like Yahoo didn’t expect these. They happen to corporations all the time and are a cost of doing business.
@Sean – I get where you’re coming from but I think you have a pretty naive view. The fact is that, for better or worse, public companies have a fiduciary duty to their shareholders. That means that it is a public company’s DUTY to maximize shareholder value.
So, of course, the interpretation of “maximize shareholder value” is really where most of these lawsuits arise.
But this case is pretty clear. Almost everyone agrees that the price that MS has offered is fair and increases shareholder value more than Yahoo’s current operations can and probably more than Yahoo’s future earnings growth could.
It’s certainly debatable whether long-term this merger increases shareholder value, but it’s not a cut and dry bad deal by any means.
So in this case lawsuits are certainly justified and do make sense. Some folks rightly beliave that Yahoo is in breach of its fiduciary duty to shareholders.
I actually think this is a good thing because it provides the proper check against management and boards who have bad judgement due either to stupidity or just being overly emotional.
Agree with #16. I own nearly as many shares as the folks in Michigan so I guess I should think about suing, too.
This country has caused its own problems with letting any idiot sue anyone for anything. I think its ridiculous that they would even be allowed to file a lawsuit against yahoo for not selling. On the flip side, i bet some idiot would sue yahoo if they did sell, both ideas should be struck down by any court. I guess next we should sue the government because the candidate that gets elected isnt who we wanted. Sue them! How very lame.
Well there is always http://www.oziwi.com for those people Downunder. And we are not selling anytime soon
Looks like Yahoo is falling apart these days.
So many mistakes and misfortunes on this company that I see it as a bleeding Godzilla that tries to survive but anything it does makes it worse.
Good article about it by Adam Lashinsky in the last issue of Fortune magazine (yeah, I am a former Business 2.0 subscriber).
Looks like they’re going down and I do not see another opportunity for them that would be at least as good as the Msft offer.
Too bad…
What idiocy. So this institutional investor holds just $421,600 worth of Yahoo stock (13,600 @ $31) and rather than selling decides it would be better to sue. The MSFT offer to YHOO earned Wayne County a 62% premium and somehow they think suing YHOO is going to get them an ever better return? How much are they going to sue for seeing as how they’re only into YHOO for such piddling amount? And how much would going through with the suit cost them?
This reminds me of that $10 dry cleaning bill dispute that resulted in the $67 million civil suit last year. Ridiculous use of the judicial system.
This is an interesting move and one I think the people who surround that institution should think about. I don’t think it is a smart move since it looks like much of this might be haggling and/or business dealings and formalities. It seems premature to sue.
The people who surround that organization should look at the leadership and consider whether this was a wise move by their leadership.
@Sean “I bid $300 billion for Microsoft. That’s $30 B above their market cap.”
I see your offer and raise you 10B
@20: AGAIN, I must try to inject some common sense into TC comments about Yahoo!.
They are the world’s most visited website.
They have the largest mail platform, the largest international IM platform, and are #2 search and are top-3 in something like 20 or 25 different market sectors.
Social networking is hot, yes? Don’t you think because of their portal structure and the amount of traffic and information they amass, that once they figure out how to properly “socialize” it, they immediately become a huge player in that space?
They’re not stupid. They know it, and that’s exactly what they’re doing. The people who say “Yahoo! doesnt make the right moves and I don’t care, blah blah blah” like #2 are idiots. Y! is the #1 most visited website in the world for a reason. They know how to attract and keep people. Now to make it even more sticky, make it social for a huge, attractive, and importantly money-spending demographic that currently existing sites cannot market for..
Seriously people. What the fuck do you think they’re working on?
@25
Broadcast.com. Owned.
Looks like Yahoo is getting itself deeper into trouble.
I hope they dont end up like AOL.
I think everyone has forgotten about Brad G. He was going to buy the WSJ. He could put together a counter to NewsCorp. Doesn’t he have a grudge against NewsCorp for the MySpace deal?
Well, at least on the employee side, the sentiments seem to get less irate as the survivors get the good news! This person that I had interviewed in the first group was very militant in his /her (Im trying to be vague), outlook (!) on the proposed Microsoft buy.
But now, they got the good news and seem less angry, and more philosophical.
http://bizcast....sition-pre.html
@25 those are all good ideas and I’m sure you are right that Yahoo is thinking on those lines…..but much like their response time to stuff these days….I think their idea of a revolutionary social network that will make it a great destination for ad spenders……will again, come too late…..
the reason why people say (or atleast most people) say that they should sell to Microsoft is because MS is atleast trying to put up a fight against google…..Yahoo is just sitting their taking up the ass for last couple years…..MS is a much more aggressive company and if they were in yahoo’s position the search adv. space for better or worse would be a lot different…..
You said they are not stupid. Maybe but whatever they’ve been doing for last couple of years certainly confirms that they are either stupid or just don’t want to put up a fight….
No one has a crystal ball but if I am a shareholder, going by what they’ve done so far, I can’t really “trust” this current management to come up with anything better than what Microsoft offered…..
@1: you my friend, are a moron.
@25: it doesn’t matter what they are working on. If enough shareholders vote to sell to MSFT, then MSFT wins.
This lawsuit maybe BS based on the number of shares they hold, but even if they lose $.01 a share because of Yahoo!’s board, they are entitled to sue because they have damages. It may not be much, and it may be a frivolous lawsuit, but they are entitled to sue.
-Gordon Gecko
When there’s a lawsuit flying around, I always had this funny feeling the Mugro$oft may be sponsoring, But what do I know, I just a janitor.
That lawsuit sounds funny. They have no chance of winning and will accrue huge legal fees on their tiny shareholding.
The reason they will not win the lawsuit, is as this is a hostile offer to buy shares, they have the option to do so without board’s recommendation and get the MS buyout price.
What law firm is representing? There are several firms that have been investigated for giving kickbacks to institutional investors in exchange for being ready lead plaintiffs in shareholder suits.
In this kind of situations America rules! NOT! This is one reason why America is not a great extraordinary super …. you got the point, country.
#25 Hater, You hit the head on the nail. If indeed Yahoo is working on socializing thier network (this is where they are losing market share i.e. myspace, friendster etc.) they would suddenly be running neck in neck with google and MSN would be left out of the equation.
You don’t want MSN buying yahoo. MSN has a horrible track record with the internet. Horrible. Yahoo needs to get the socializing down and they will be right back in the game. If I was MSN, I would offer a price Yahoo could not refuse and then bring in the right expertise to socialize the network to take back market share. Then we would have Google and MSN/Yahoo coexisting and controling the internet as they both would be specializing in different aspects of the internet.
However MSN would not do this. They would buy Yahoo and then be clueless on what to do with the company once they bought it. At least Yahoo knows what it has to do and I would say most likely they are working on it diligently. Either way though, one of the companies will be left out of the internet equation (but it won’t be both) and I would bet my money on Yahoo for the long term, but never MSN. MSN just doesn’t grasp the internet and its endless potential. Heck for all the smart moves Bill Gates had ever made, the comment that the internet would never be big, was the most puzzling comment of his reign. It shows that MSN does not understand people. And PEOPLE my friend is what drives the internet. PEOPLE are the INTERNET. YAHOO has demonstrated they understand that concept. MSN doesn’t have a clue.
Use MSN’s space for a while. You will see what I mean. NEVER has been user-friendly. NEVER will be..for the masses at least.
As a former officer, former director of a public company, I look at being sued by Wayne County’s retirement fund as a very big deal. Professional plaintiffs law firms routinely file laughable lawsuits on behalf of owners of 15 shares (not 150, not 1500, not 15,000, but 15). I know. I’ve been on the defendant end of some of these, which invariably get dismissed but only after mountains of hassles.
Institutional shareholder activism is definitely on the rise. Yahoo’s only reason for rejection, transparently clear, is that they don’t like Microsoft. There are very few other viable bidders who would find 60% worth of synergy/savings/strategic benefit from this deal. A perfunctory rejection of Microsoft as a negotiating ploy is natural, but I doubt more bidders are coming forward. The only interpretation left to holders like Wayne County is that Yahoo is acting against the interest of shareholders.
I understand and appreciate Yahoo!’s position. I know they’re thinking of ways to enhance and improve, and I appreciate that too. What I don’t understand is the lack of shareholder loyalty. I confess to being an emotional investor but, if you’re a shareholder, just shut-up, sit back and watch to see what comes of it all. Give me a break! Here’s a hint… the lawyers don’t need anymore money! Idiots like that are just costing the other shareholders more earnings. What an idiotic thing to do! Stop making your financial plans based on something that hasn’t happened yet!
Love this discussion guys, really good points! Sean we vote for you!!!!!!!!!!!!!