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If, however, the shareholders DO prefer the lower offer, couldn't they call a special meeting to instruct the Board to take the lower offer? Or, along the same
by drags 16y ago
If, however, the shareholders DO prefer the lower offer, couldn't they call a special meeting to instruct the Board to take the lower offer? Or, along the same lines, I imagine the Board could certify the question to be decided at a special meeting of shareholders and that would relieve them of the duty burden.
Yelp's a pretty big company, and I have no idea what their bylaws look like, but a lot of corporations have provisions allowing those who hold a majority of shares to act on behalf of the shareholders by written consent. It doesn't sound like it would be too difficult for the founders + management to get together with a few of their investors and force the deal they want notwithstanding the Board's fiduciary duty.
- bl4k 16y agoIf the shareholders and board agree to all accept the lower offer then there still might be a problem because VCs also have a duty to their LPs and own share/stakeholders (both other partners at the firm and the LPs). In theory, with agreement from absolutely everybody, you could accept the lower offer. But that rarely happens, because why would a shareholder care that you don't want to go and work for Yahoo? They want the additional $200M. Also by not accepting the lower offer from Google, they are hoping that Google comes back and matches the Yahoo offer - knowing that Google know that they can't possibly accept a lower offer. The management at Yelp must own enough of a stake in the company, or control enough of the board or voting rights to prevent a forced sale from the VCs. I can imagine that in almost any other company the VCs may have forced the sale to Yahoo.