In response to the recent buyout rumors an investigation on behalf of investors of Yahoo! Inc. (NASDAQ:YHOO) over possible breaches of fiduciary duties in connection with a potential takeover was announced.

The investigation by a law firm concerns whether Yahoo! Inc. and its Board of Directors breach their fiduciary duties owed to Yahoo! Inc. (NASDAQ:YHOO) investors in the event of a proposed takeover.

Shares of Yahoo! Inc. increased in response to the recent takeover news to over $16.50 per share on Friday, October 15, 2010. AOL and private-equity firms, including Silver Lake Partners and Blackstone Group LP, are reportedly exploring a joint bid for Yahoo.

The investigation by a law firm questions whether a potential sale process and the potential price would be unfair to the shareholders of Yahoo! Inc. (NASDAQ:YHOO).

YHOO shares traded as early as August as low as $13 and as high as $15.50 in July and as high as almost $19 per share in April 2010. During 2008 YHOO traded at almost $30 per share and during 2005/6 at over $40 per share.
Yahoo! Inc. reported over the past four years relatively consistent 12 months total revenue in the range of $6.4billion to $7.2billion. Its Net Income for the past four years ranged from $418.92million to $751.39million.

Therefore the investigation focuses whether the Yahoo! Inc. board of directors will undertake an adequate and fair sales process to obtain fair consideration for all shareholders of Yahoo! Inc. (NASDAQ:YHOO) and will breach their fiduciary duties to Yahoo! Inc. (YHOO) shareholder by failing to adequately shop the Company before entering into any transaction.