One of the defensive measures that really stuck in Carl Icahn’s craw was Yahoo!’s adoption of an employee-retention plan almost immediately after Microsoft‘s initial acquisition proposal. The plan would have allowed employees to retire from Yahoo! upon an acquisition by Microsoft and receive hefty severance payments. According to Icahn, that would have made it approximately $2.5 billion more expensive for Microsoft to complete the deal. At the time, Microsoft was offering about $45 billion for Yahoo! (then trading at $26, but at $19 prior to news of the offers came out).
In what may be too little entirely too late, Yahoo! has reached a settlement with shareholders pursuant to which it will cancel the plan. Two Detroit pension funds were the lead plaintiffs in a shareholder suit over Yang’s rejection of a $33 firm offer from Microsoft (Yahoo! has traded as low as $9 in the months since, but has recently rallied). Microsoft isn’t indicating any further interest in acquiring the entire company, but a search deal may be in the works.
The suit was an all-Skadden affair.
Yahoo!’s counsel was Ed Welch (Georgetown BS ’72, Villanova JD ’76), who has done a host of deals for the company over the years.
Plaintiffs’ co-counsel were Joel Friedlander (Penn BS ’88, Penn JD ’92) of Bouchard Margules & Friedlander and Mark Lebovitch (SUNY Binghamton BA ’96, NYU JD ’99) of Bernstein Litowitz Berger & Grossmann. Lebovitch worked on a number of deals with Welch during the 4-1/2 years Lebovitch spent at Skadden, according to a report in the AmLaw Daily last year. Friedlander worked at the firm from 1993 to 1995.
One further connection: all three clerked on the Delaware Court of Chancery. Welch in ’76-’77, Friedlander for Justice Jack Jacobs (then a Vice Chancellor, now on the Delaware Supreme Court) in ’92-93, and Lebovitch for VC Lamb in ’99-2000.
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