Carl Icahn Takes on Yahoo's Board

narramissic and several others have written to point out that Carl Icahn has initiated a proxy battle with Yahoo's board of directors over their rejection of Microsoft's bid for the company in February. Icahn has purchased millions of Yahoo shares over the past week and assembled a group of nine other investors (including Mark Cuban) to persuade the board to resume talks with Microsoft. Yahoo remains unimpressed. Icahn's letter to Yahoo accuses: "It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo's closing price of $19.18 on the day before the initial Microsoft offer. 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."

Re:Addendum:

[Anonymous Coward]

Welcome to Stock Market 101!

Who cares if the resulting Conglom-O tanks? It's all about the Benji's when you're talking that kind of scratch.

(Personal aside: It's sad when us poor saps see past the influx of cash and rationally evaluate the culture of both the companies and the market and realize that such a proposition would be a hands down mess, while the big bucks players wash their eyeballs of the whole situation).

I don't get it.

[Coppit]

I can see how Yahoo would help Microsoft compete with Google. But how does Microsoft help Yahoo?

Re:Addendum:

[Anonymous Coward]

So in the end Icahn is kinda smart if it takes you 6 minutes to figure out his plan.

Comment removed

[account_deleted]

Comment removed based on user account deletion

Competition in the search engine market

[guacamole]

How come FTC hasn't looked into the antitrust implications of this merger? If Microsoft and Yahoo are allowed to merge, the US search engine market will be split between only two companies, a dangerous situation. Moreover, one of them, Microsoft, had been already convicted of possessing a monopoly in the desktop OS market and using its market power in operating systems to tie its secondary products with the OS, thus gaining an unfair advantage over other software and service vendors. Even if the FTC allowed Microsoft and Yahoo to merge, they should seriously consider forcing Microsoft to give the consumer a choice of creating a gmail account and say getting google bar instead of automatically getting the standard MSN setup.

What offer?

[palemantle]

What offer is this idiot talking about?
From TFA: "I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company"

Microsoft, on the other hand, says it is no longer interested http://www.microsoft.com/presspass/press/2008/may08/05-03letter.mspx [microsoft.com]

Re:I don't get it.

[iMacGuy]

I don't. Yahoo is terrible at everything except being a replacement for MSN Search, and I'd be amazed if MS would actually replace anything with a PHP script. They might have to read its source code! At least I get to hear an entirely new definition of "dynamic".

When I see something like this..

[wanax]

I've followed the /. headlines over this lack of a deal, and have been generally surprised by the neoliberals ordaining that the yahoo board had a duty to sell the company for short-term advantage. Despite the fact that under any decent discount rate, the whole proposal represented little more than a bet.

Even if regulated accounting doesn't float your boat, the ideas of Fischer Black (eg. http://www.amazon.com/Fischer-Black-Revolutionary-Idea-Finance/dp/0471457329/ref=sr_11_1?ie=UTF8&qid=1210920867&sr=11-1 [amazon.com]
) can't be ignored. Under that light, the entire deal seems to be more involved in noise trading than any solid economic expansion.

Re:What offer?

[Eighty7]

Even without an offer on the table, there's other reasons a major shareholder might want to get rid of the board. He might feel he needs to punish them for not doing what he wanted. Or even just to show that he can punish them & maintain credibility.

Icahn is right!

[voss]

Yahoo is not the #1 search engine and even if microsoft took it over they still wouldnt be.

Whatever you think of microsoft as a company doesnt matter.

  The yahoo board is supposed to represent its shareholders, if I hold stock in a company and someone offers 72% more than the shares are worth, and the company wont even let me consider the offer id be pissed too!

Icahn doesnt have a duty to yahoo, yahoo has a duty to its shareholder to act in their best interests
even if it means selling out to microsoft and losing their cushy jobs.

Sometimes not everything is black and white.

Illogical conclusion

[monkeySauce]

So according to this guy:

Microsoft + Yahoo = "Dynamic" ?

I think he's way off base. If Microsoft is going to be a Dynamic Duo with anyone, it would be more likely some organization that thinks like them and can compliment their business practices, such as:

Microsoft + Halliburton
Microsoft + SCO (oops, already happened)
Microsoft + Phillip Morris
Microsoft + the Mafia
Microsoft + Dow Chemical
Microsoft + Exxon Mobile ...

To his credit, the dude's got balls!

[zubikov]

I can see how Icahn angers just about everyone on this forum, but look at it from another angle. He buys 59M shares, walks right up to the chief and says fuck you, pay me. This is a textbook example of greenmail, and he will probably force a nasty proxy battle which will result in him destroying Yahoo by giving it to Microsoft. That's what happens when you take a company public, so everyone including Yang should stop crying. He knew exactly what he was getting into.

Re:Icahn is right!

[duplicate-nickname]

What do you mean Yahoo would be endangered? It wouldn't exist anymore. "Yahoo" would just become a Microsoft brand, probably pulling in the Live/MSN products under it.

This would have been a better deal for Yahoo than Microsoft. Yahoo shareholders would have gotten an "out" from that struggling company, but Microsoft would have been stuck with yet another Internet property that can't compete with Google's advertising business.

If I were a Yahoo shareholder, I would be pissed at the board rejecting Microsoft's offer. If I were a MS shareholder, I would be pissed at Balmer for going off on this wild goose chase.

Re:In other news....

[Cornelius the Great]

You're exactly right. Icahn is nothing more than a corporate raider- he buys just enough shares of a company to get a controlling state so that he could suck the company dry. He pretty much single-handedly destroyed TWA (IIRC, the biggest airline in the 80s) in the late 80s/early 90s by selling off its most profitable ventures. By the time TWA could oust him, the damage had already be done, and they went bankrupt.

He recently tried to do the same thing to Motorola (disclaimer- I'm a current shareholder of MOT, and despise him) before the shareholder vote kept him out of the board- he still sued the company to force Motorola to sell its mobile business so he can cash out quickly.

Interestingly, he owns a hefty stake of Take Two. He may try the same shit if EA comes back with a bigger offer.

He has no other vision than seeing dollar signs as quick as possible (at any cost) and doesn't care any about the long-term health of the companies he plunders. Thousands have lost their jobs and even more small-time retail investors have been trampled on by him.

He's the worst kind of trader. In fact, I welcome short hedges more than seeing him scoop up shares of companies that I have positions in.