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Web giant Yahoo has said it is facing seven shareholder lawsuits over its
handling of Microsoft's unsolicited takeover bid, which it has rejected.
It also said that dealing with the unwanted proposal, worth more than $40bn (
20.2bn), was distracting for management and staff.
The comments, made in Yahoo's annual report, come as Microsoft steps up efforts
to take control of the firm.
Yahoo has said it is worth more than the $31-a-share it is being offered.
But Microsoft has maintained that its cash-and-share proposal is a "full and
fair" valuation.
It emerged last week that the software developer has hired a firm that
specialises in corporate actions in a sign that it is preparing to try to
overthrow Yahoo's board and replace it with directors more sympathetic with its
objectives.
The impasse has triggered seven lawsuits against Yahoo from disgruntled
shareholders, including pension funds.
Five accuse the firm, which owns one of the most popular internet search
engines, of rebuffing Microsoft without trying to get a better deal.
'Significant distraction'
In its annual report filed with the Securities and Exchange Commission, Yahoo
suggested that Microsoft's move had the potential to scare off business
partners and made it difficult to retain and hire new talent.
"The review and consideration of the Microsoft proposal (and any alternate
proposals...) have been, and may continue to be, a significant distraction for
our management and employees," Yahoo said.
It added that consideration of the proposals may require "significant time and
resources" to review.