Yahoo! Inc. (YHOO:US) was sued by an investor in New York state court over its repurchase this month of 40 million shares of the company from director and activist Daniel Loeb for $1.16 billion.
Shareholder Lawrence Zucker filed the derivative suit yesterday in Manhattan against Loeb, his Third Point LLC, Sunnyvale, California-based Yahoo and its directors, alleging claims of breach of fiduciary duty, waste of corporate assets and unjust enrichment.
Yahoo paid more than $50 million more than it should have for the shares based on the market price of its stock on the day before the sale was completed, allowing Third Point to make more than $600 million in profit, Zucker said in his complaint. He accused Loeb of “self-dealing.”
“With block trades, the seller generally accepts a discount to the market price to compensate for the decrease in market value that would otherwise occur if such a large amount of stock entered the market at one time,” Zucker said in the suit. “Yet here, Third Point sold its shares at a premium to the market price the day before the sale was completed. Loeb’s position as a director for Yahoo and chief executive officer of Third Point means that he was necessarily on both sides of the transaction.”
Yahoo didn’t immediately respond to an e-mail seeking comment on the lawsuit. The company said July 22 that Loeb, was leaving the board and selling $1.16 billion of his stake back to the company, capping an almost two-year effort to revamp the Web portal.
“This is a baseless filing in law and in fact and will be defended vigorously,” Third Point said today in a statement.
The case is Zucker v. Loeb, 652678/2013, New York State Supreme Court, New York County (Manhattan).
To contact the reporter on this story: Chris Dolmetsch in New York State Supreme Court at firstname.lastname@example.org.
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