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Icahn takes Yahoo! challenge

by on16 May 2008


Will play hardball with Yahoo Directors

We reported earlier that billionaire Carl Icahn was considering entering the fray against Yahoo’s Board of Directors after the Yahoo Board turned down Microsoft’s latest buyout offer.

Icahn has announced that he will, in fact, lead a battle against Yahoo’s Board members, and will use his influence to persuade them to reopen talks with Microsoft.  Microsoft recently offered a $47.5 billion bid to buy the shares of Yahoo.  Icahn penned a letter to Yahoo's Board, which stated that the Board members had "acted irrationally and lost the faith of shareholders and Microsoft. It is obvious that Microsoft's bid of $33 per share is a superior alternative than Yahoo's prospects on a stand alone basis."

Icahn obviously carries a big stick. A few hours later, Roy Bostock, Yahoo’s Chairman of the Board, responded in writing to Icahn that Icahn’s proposal was not in the best interests of Yahoo’s shareholders, but that Yahoo remained "willing to consider any proposal from any party including Microsoft if it offers our stockholders full and certain value."

Microsoft spokesman Frank Shaw offered no comment on Icahn's or Yahoo’s actions, but restated the company line from Microsoft after the Yahoo talks broke down: "The company has moved on," he said. Some analysts believe that Microsoft really has ‘moved on,’ while others think a deal can still be brokered.

Icahn left the door open as to whether or not he intends to pursue a settlement with the Board or instead launch a full blown proxy battle where both sides typically spend millions and lead a barrage of attacks on each other. Icahn reportedly urged Yahoo to "move expeditiously to negotiate a merger with Microsoft, thereby making a proxy fight unnecessary."

Icahn has prepared a new slate of nominees to replace Yahoo’s current Board members in the event the proxy war occurs. The list includes himself; Frank Biondi, a former Viacom Inc. Chief Executive; Keith Meister, Vice Chairman of Icahn Enterprises LP; Mark Cuban, owner of the Dallas Mavericks NBA  basketball team and co-founder of cable network HDNet; Lucian Bebchuk, a Harvard corporate governance expert; John Chapple, former CEO of Nextel Partners; Adam Dell, a venture capitalist and brother of Michael Dell of Dell Computer; Edward Meyer, a former CEO of ad firm Grey Global Group; hedge fund manager Brian Posner; and Robert Shaye, former co-CEO of Time Warner's New Line Cinema.

Icahn plays to win and is known for his blunt tactics and hardball negotiations.  It looks that things are going to get very interesting for Yahoo in the near future.

Last modified on 16 May 2008
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