Trial

Yahoo investors seek July trial in Delaware lawsuit

Yahoo! Inc. investors asked a Delaware judge to set a July trial date for their lawsuit over the Internet company's decision to rebuff buyout offers from Microsoft Corp.

Joel Friedlander, an attorney for the Police and Fire Retirement System of the City of Detroit, requested an expedited trial schedule in a letter yesterday to Chancery Judge William B Chandler III. Yahoo shareholders are seeking to hold directors financially liable for snubbing Microsoft's bids and for setting up a severance plan in case the company is acquired.

“A July trial on the validity of the severance plan is imperative for Yahoo shareholders,” Friedlander wrote in court papers. “Invalidation of the severance plans prior to a stockholder vote upon a finding of breach of fiduciary duty is the most appropriate remedy.”

Microsoft, the world's largest software company, withdrew a $33 a share bid for Yahoo on May 3 after the two companies failed to agree on a price. Microsoft, based in Redmond, Washington, had offered $40 a share in January 2007, according to court papers.

Yahoo investors accused Jerry Yang, the Sunnyvale, California-based company's chief executive officer, of designing the severance plan to thwart Microsoft's offer by giving employees incentives to quit rather than work for a buyer. Microsoft wanted to buy Yahoo to compete against Google Inc., the owner of the most-popular Internet search engine.

Yahoo fell 18 cents to $26.40 at 4:29 p.m. New York time in Nasdaq Stock Market trading. Microsoft rose 18 cents to $27.89.

Icahn Estimate

Billionaire Carl Icahn, a Yahoo investor, said the severance plan would cost Microsoft as much as $2.4 billion, discouraging a bid. Yahoo disputes the figure.

Icahn, who isn't taking part in the Delaware suit, has proposed a slate of directors to Yahoo's board and said last week that the company should offer itself to Microsoft for $34.375 a share. Yahoo's next shareholder meeting is scheduled for Aug. 1.

Yahoo spokeswoman Diana Wong didn't immediately return phone and e-mail messages seeking comment.

(Published by Bloomberg - june 11, 2008)