Yahoo rejects Icahn ultimatum - signs deal with ad giant
Yahoo chairman Roy Bostock has stridently rejected Carl Icahn's attack on the company, charging the corporate raider with "significantly misunderstanding the facts" of Microsoft's spurned takeover proposal, dpa reported.
The rebuttal coincided with an announcement Friday by Yahoo that it had struck an advertising partnership deal with WPP Group that will let WPP buy ads on Yahoo's online ad exchange. The deal is part of Yahoo's attempt to increase its advertising revenue and ward off unwanted takeovers. The company is also talking with Google about an ad deal.
In his letter to Icahn Bostock said "a fair-minded review of the factual record" would show that the existing team was correct in concluding that Microsoft's 47.5 billion dollar offer "significantly undervalued" the internet firm.
Icahn, who bought 1.3 billion in Yahoo shares since Microsoft withdrew its offer on May 3, is trying to oust the current board and install a hand-picked slate that would be mandated to revive the aborted Microsoft deal.
"We do not believe it is in the best interests of Yahoo stockholders to allow you and your hand-picked nominees to take control of Yahoo for the express purpose of trying to force a sale of Yahoo to a formerly interested buyer who has publicly stated that they have moved on," wrote Bostock, referring to Microsoft.
"That said, we have been crystal clear in our stance that we have been and remain willing to consider any proposal from any party including Microsoft if it offers our stockholders full and certain value," added Bostock who said that the two companies had met seven times to discuss the deal. He blamed Microsoft for failing to provide information on the potential regulatory issues brought up by a merger.
In his letter Thursday to Bostock Icahn accused Yahoo of acting "irrationally" in rejecting Microsoft's 33 dollar per share offer.
"It is quite obvious that Microsoft's bid of 33 dollars per share is a superior alternative to Yahoo's prospects on a standalone basis," wrote Icahn. "I believe that a combination between Microsoft and Yahoo is by far the most sensible path for both companies and more importantly would be a force strong enough to compete with Google on the Internet."
"It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72 per cent premium over Yahoo's closing price of 19.18 dollars on the day before the initial Microsoft offer."
The result, he said, was that "a number of shareholders have asked me to lead a proxy fight to attempt to remove the current board and to establish a new board which would attempt to negotiate a successful merger with Microsoft, something that in my opinion the current board has completely botched."
Icahn nominated a strong slate of alternative board members, who will try to replace the incumbent directors at the company's annual general meeting on July 3. If successful the shareholder revolt could oust Yahoo CEO Jerry Yang from the company he founded as a graduate student in 1994.
But Icahn held out the offer of a compromise, saying that the Yahoo board could quell the mutiny by reopening negotiations with Microsoft. "The board of directors of Yahoo has acted irrationally and lost the faith of shareholders and Microsoft," Icahn, 72, said in the letter. "I sincerely hope you heed the wishes of your shareholders and move expeditiously to negotiate a merger with Microsoft, thereby making a proxy fight unnecessary."
Microsoft had targeted Yahoo as a way to better challenge the online dominance of Google. But Yahoo CEO Yang said the company's offer undervalued Yahoo which was set to experience strong growth due to a revamped advertising system. The WPP deal announced Friday could bolster that argument by giving one of the world's largest advertising conglomerates an inside track into deploying ads for its clients across the network that Yahoo operates with numerous media partners.