Some details of the back-and-forth between Microsoft (MSFT) and Yahoo (YHOO) have come to light as a result of the unsealing of documents in a shareholder lawsuit against the battered Internet giant, as Eric Savitz details at Tech Trader Daily. One of my favorite moments is where it emerges that Microsoft offered Yahoo a whopping $40 a share back in January of last year, but then CEO Terry Semel turned the deal down. Nice call, Terry — that’s right up there with taking a pass on buying Google in 2002. Of course, Terry still has most of his $71-million in options or whatever, so he’s probably doing OK. Other shareholders, not so much.

In a nutshell, the complaint argues that Yahoo co-founder and CEO Jerry Yang and the board of directors deliberately created blockades aimed at resisting Microsoft’s offer, rather than taking a deal that was clearly the best one available — and arguably fully valued as well. One of the big sources of criticism is the fact that Yahoo planned to sweeten its severance package system so as to create a giant poison pill, one that would have added billions in extra costs should Microsoft have been successful. Microsoft supremo Steve Ballmer cited similar fears as one of the main reasons he withdrew the takeover bid.

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Mathew Ingram

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