Can hatred be a predictor of Delaware court outcomes in battles for corporate control? Sometimes.

Consider the presence of deep personal antipathy in (1) Revlon, where bidder Ronald Perlman had a stormy relationship with target CEO Michel Bergerac and (2) QVC, where bidder Barry Diller had long loathed his former tsar-like boss now the CEO of target Paramount. The Delaware court in both cases rebuked the target's actions. Compare the absence of such factors in Unocal and Time, where the Delaware court refrained from rebuking the targets.

There is no duty not to hate in Delaware corproate fiduciary law, of course, but the antipathy can lead people to actions that skate too close to the edge for fiduciaries. Yahoo, watch out!

Ah, the classic management dilemma!

Mgmt: "This is what we want, and what we feel is best for you."

Shareholders: "I own 1/10000th of this corporation, and I say make the deal!"

Mgmt: "Damn you meddlesome kids!"

It must be very difficult for managers when they are reminded that they don't have absolute control.

Larry,

Interesting hypothesis. Hard to test, but it wouldn't surprise me if there were some correlation between managerial disdain for the bidder and Delaware's skepticism of the motives.

tRJ, spot on.

Still, I wonder why Yahoo's shares are up today. Do investors think a potential AOL deal is value enhancing? Or are they thinking that Microsoft is more likely to go hostile now? Or what?

My armchair guess: All the big acquisitions in the web world (Flickr, Facebook, YouTube, del.icio.us) make other similar acquisitions enticing. Microsoft, already threatened by Google's rising dominance and competitiveness, is especially keen to remain at the top of the heap. Grabbing Yahoo! would allow them to grab the company that has made perhaps the most savvy acquisitions of all the big players.

In short, it seems like a safe bet that Microsoft will get Yahoo! one way or another. This AOL (how are they still even viable anymore?) angle only increases the competition, and the ultimate (and inevitable) price Microsoft will pay to acquire Yahoo!

The only certain outcome is that someone will pay far too much for Yahoo. That's OK, however. The accounting rules allow the acquiring company to write off the mistake well after the executives who do the deal are long gone.