Yahoo Rebuffs Icahn And Microsoft Move

Yahoo said it had rejected an attempt by Microsoft and Carl Icahn, the activist investor, to replace its board immediately and buy its search business, condemning the joint move as an “odd and opportunistic alliance”.

The internet search company said yesterday that it had repeated an offer to sell all of Yahoo to Microsoft for at least $33 per share, executing the transaction before its annual meeting on August 1. Yahoo added that it had also offered to negotiate an improved search-only sale but Microsoft had rejected both offers.

Microsoft and Mr Icahn were not immediately available for comment.

Their apparent move was an unusual pre-emptive strike ahead of Yahoo’s annual meeting, where Mr Icahn is bidding to replace the Yahoo board with his own slate of directors.

Mr Icahn has made no secret of his plans, if successful, to try to sell Yahoo to Microsoft, which abandoned a $47.5bn bid for the company on May 3.

Yahoo said it had received a proposal on Friday evening for a complex restructuring of the company that would have included the acquisition of its search business by Microsoft. It said it was given less than 24 hours to accept the proposal, “the fundamental terms of which Microsoft and Mr Icahn made clear they were unwilling to negotiate”.

It had rejected it as not in the best interests of shareholders. It cited its recent agreement with Google to provide search advertising as offering superior financial value and less risk.

It added that the Microsoft/Icahn proposal would preclude a potential sale of all of Yahoo for a full and fair price. It also required the immediate replacement of the current board and removal of the top management team, which the board believed “would destabilise Yahoo for the up-to-one year it would take to gain regulatory approval for this deal”.

Roy Bostock, chairman, said it was ludicrous to think Yahoo could accept the “take it or leave it” proposal from Microsoft and a “single short-term investor”.

“We will not be bludgeoned into a transaction that is not in the best interests of our stockholders,” he said.

The Microsoft/Icahn proposal also contained illustrations of how value could be returned to shareholders.

Yahoo said this included the spin-off of its Asian assets and returning the cash to shareholders.

It could take these steps itself and was continuing to “evaluate these options”.

On June 12, Yahoo announced that talks with Microsoft on a potential acquisition of all or part of Yahoo had ended.

It said Microsoft had stated unequivocally that it did not wish to buy all of Yahoo while the Yahoo board had decided that the sale of its search business would not be in the best interest of shareholders.

It announced a search advertising deal with Yahoo on the same day.

– By Chris Nuttall

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