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A judge has unsealed documents in a shareholder lawsuit against Yahoo, the Wall Street Journal reports, and the allegations, now posted online, are explosive. Chiefly, that Microsoft offered to buy Yahoo at $40 a share in January 2007. Then-CEO Terry Semel turned Microsoft down, seeking to strike a commercial partnership instead. Slow progress in negotiating that deal made Microsoft executives impatient, leading to its unsolicited bid at $31 a share. While the plaintiffs, two Michigan pension funds, are presenting that history, it actually explains much about Yahoo's resistance to Microsoft's recent advances.

Having turned down Microsoft at $40 a share, why would Yahoo then accept a bid at a price 23 percent lower than that? One has to weigh cofounders Jerry Yang and David Filo's resistance to Microsoft's overtures in light of that earlier offer; they can argue that they were trying to get Microsoft to better its earlier price, rather than rejecting its new, lowball offer.

Still, Yang and Filo don't come off well in the complaint. Yang is shown pushing for a $1.5 billion severance plan that even Yahoo's compensation consultant called "nuts"; Filo is an oddball figure who, lacking a board seat and a title other than "Chief Yahoo," never should have been involved in the negotiations in the first place. If the board needed an excuse to push Yang and Filo aside, the plaintiffs certainly made the case for them.