The papers came to light after a case filed by the Police & Fire Retirement System of the City of Detroit and the General Retirement System of the City of Detroit.
The documents (PDF) reveal that Microsoft offered US$40 per share in January 2007, and that the Yahoo board cleared the rejection of the offer.
But the documents also purport to show attempts by Yahoo co-founder and chief executive Jerry Yang to stifle any possible deal with Microsoft.
These include promising generous benefits to key staff who would leave in the event of a takeover, and his general negative attitude to Microsoft.
"Yang's defensive and self-interested conduct was grossly disproportionate to any threat arguably presented by Microsoft's proposal for a friendly merger," the papers read.
"There is no question of Microsoft's ability to finance the transaction, or its sincerity in seeking a negotiated position. Yahoo's poison pill precluded a hostile bid."
Yahoo opposed the release of the documents, and they will come as a deep embarrassment to the board since the company's share price is currently averaging around US$26.
Billionaire investor Carl Icahn is in the middle of a hostile fight for boardroom control of Yahoo, and has already said that he aims to expel several board members for what he describes as mismanagement.
Yahoo turned down US$40 per share offer from Microsoft
By Iain Thomson on Jun 5, 2008 4:17PM