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Yahoo and Carl Icahn dueled Thursday as the corporate
raider vowed to overthrow the firm's board and the Internet pioneer
fired back that the billionaire misunderstood Microsoft's failed
takeover bid.
Icahn said in an open letter that
Yahoo "completely botched" merger talks with Microsoft and
that he is amassing Yahoo stock to oust the board of directors at an
annual shareholders meeting on July 3.
"Unfortunately, your letter
reflects a significant misunderstanding of the facts about the
Microsoft proposal and the diligence with which our board evaluated
and responded to that proposal," Yahoo board chairman Roy
Bostock wrote in an open response to Icahn.
"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."
Bostock said board members met
more than 20 times with Microsoft after the US software giant
offered to buy Yahoo for 44.6 billion dollars in stock and cash on
January 31.
"Throughout this process our
board kept an open mind and an open ear," Bostock wrote.
Icahn said in his letter that he
had acquired 59 million shares of Yahoo -- around four percent of
its capital -- and had formed a 10-person slate which will stand for
election against the current board.
"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 dollars on the day before the initial Microsoft offer,"
Icahn wrote.
He added that he is seeking
antitrust clearance to buy as much as 2.5 billion dollars' worth of
Yahoo shares, which would give him seven percent of the company.
"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 "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 said a combination between
Microsoft and Yahoo "is by far the most sensible path for both
companies."
Greg Sterling, an analyst at
Search Engine Land, said if Icahn succeeds, the new board would move
immediately to restart talks with Microsoft.
"Assuming Microsoft were
still interested it would be in an arguably stronger position than
it was with Roy Bostock, (chief executive) Jerry Yang, et al, in
control of Yahoo," Sterling said.
"Microsoft might accordingly
be able to lower the per-share bid it would be willing to pay."
The 72-year-old Icahn, an
activist shareholder who has targeted companies ranging from airline
TWA to General Motors, was ranked number 46 by Forbes magazine in
its list of global billionaires, with a net worth of 14 billion
dollars.
"He is probably going to be
the Yahoo board's worst nightmare," Silicon Valley analyst Rob
Enderle said of Icahn.
"He is tenacious, smart, and
knows how to play the media. I wonder how many of the board members
have been through this as many times as he has."
Earlier this month, Microsoft
yanked its proposal for Yahoo, saying the struggling Internet
pioneer refused to budge despite the software giant upping its offer
to nearly 50 billion dollars.
Microsoft's bid would have
brought together the world's biggest software firm and
second-largest Internet search firm in an effort to better compete
with Google, which has been gobbling up an increasing share of the
lucrative Web search market.
Icahn said in his letter that
Yahoo's board "acted irrationally and lost the faith of
shareholders and Microsoft."
"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," he said in his letter.
--AFP
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