Yahoo readied plan to reject Microsoft bid: papers

By Eric Auchard

SAN FRANCISCO (Reuters) - Yahoo Inc CEO Jerry Yang ordered up a draft press release rejecting a Microsoft Corp takeover bid months before January's unsolicited bid, company documents unsealed on Monday show.

Selective details from Yahoo board minutes and other confidential company documents in an investor suit, unsealed by a Delaware Chancery Court judge on Monday, paint a picture of how Yahoo has rebuffed Microsoft's courtship since early 2007.

Attorneys working on behalf of Yahoo investors aiming to force the company to drop its anti-takeover defenses -- opening the way to a Microsoft deal -- got the papers from the company and were allowed by a judge to make them public on Monday.

Minutes of Yahoo's board meeting last October said directors discussed "the likelihood that a third party would make an offer to purchase the company." Yang then obtained approval to reject any offer, drawing up a standby press release for an offer that only arrived late in January 2008. The suit alleges the "third party" was Microsoft.

While many events described in the shareholder complaint have enjoyed wide media coverage over the past year-and-a-half -- dating back to reports of Yahoo's decision to reject a Microsoft offer of $40 per share in January 2007 -- the new disclosures bring to light Yahoo's resistance to a merger.

In notes from a phone conversation between Yang and Microsoft Chief Executive Steve Ballmer held the day before Microsoft made public its takeover bid for Yahoo, Yang sought to delay Microsoft, but Ballmer said he would wait no longer.

"You don't lose anything by waiting a week," Yang is cited as saying, according to notes taken by an unidentified Yahoo participant and released in the shareholder suit on Monday.

Ballmer responded with words to the effect that "If you really don't want to sell the biz, then (I) don't want to wait" according to the previously undisclosed notes of the call. Ballmer also encouraged Yang to make a counterproposal and said Microsoft would forego making its bid public if Yahoo did so.