Big Yahoo investor presses for ouster
Published 10:30 pm Thursday, May 15, 2008
SAN FRANCISCO — Saying Yahoo Inc.’s board “completely botched” takeover talks with Microsoft Corp., billionaire investor Carl Icahn on Thursday launched a bid for control of the Internet giant by nominating a slate to unseat the board of directors.
The candidates include Icahn, former Viacom Inc. Chief Executive Frank Biondi Jr., Dallas Mavericks owner Mark Cuban and New Line Cinema co-chairman Robert Shaye.
In a letter to Yahoo Chairman Roy Bostock, Icahn said he had snapped up 59 million Yahoo shares, worth about $1.5 billion, and was seeking permission from the Securities and Exchange Commission to amass up to $2.5 billion worth. His holdings constitute about 4.3 percent of the Sunnyvale, Calif., company’s stock.
“It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72 percent premium over Yahoo’s closing price of $19.18 on the day before the initial Microsoft offer,” Icahn wrote. “I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet.”
He added that he hoped Yahoo would listen to its shareholders and “move expeditiously” to close a deal with Microsoft, which earlier in May withdrew a $47.5-billion offer for Yahoo after they failed to agree on a price.
Yahoo and Microsoft declined to comment.
Each company’s stock gained nearly 2 percent Thursday. Yahoo rose 61 cents to $27.75. Microsoft gained 52 cents to $30.45.
Yahoo is vulnerable to a proxy battle for control of the company because all 10 board members are up for re-election at the annual meeting July 3. Yahoo requires a majority vote among shareholders to elect a new director.
The company does have a shareholder rights plan that could make it more difficult to seize control through a tender offer to shareholders, essentially asking shareholders to pledge their shares directly to Icahn. The poison pill was adopted in 2001.
Investment firm Paulson &Co. said it had bought 50 million Yahoo shares and would support Icahn’s slate.
“Carl Icahn is a professional pest,” said Lynn Stout, a law professor at the University of California, Los Angeles. “He wants a short-term juice in the share price, and he doesn’t much care how he gets it.”
Yet Boston University management professor James Post said Icahn in this case seemed to be taking the side of most big Yahoo investors. He called Icahn’s slate of directors “very solid, very serious” and predicted that at least some directors would lose their jobs.
