Icahn's Yahoo bid gets a push
Microsoft Corp. revived its pursuit of Yahoo Inc. on Monday, saying it would resume takeover talks if shareholders oust the Internet giant's board of directors.
Microsoft for the first time threw its support behind Carl Icahn, who is bidding for control of Yahoo in hopes that his team can reach a buyout deal with the software giant.
Less than a month after both companies said talks had broken down, Microsoft said it would again negotiate to buy Yahoo's search technology or possibly the entire company if Icahn succeeds in replacing Yahoo's nine directors, including Chief Executive Jerry Yang, at its annual meeting Aug. 1.
Microsoft's support for the billionaire financier marked the latest twist in the on-again, off-again buyout saga that has frustrated Yahoo investors and seesawed the Sunnyvale, Calif., company's stock.
The surprise turn of events increases pressure on Yahoo. Hopeful of a deal, investors sent Yahoo's stock soaring $2.56, or 12%, to $23.91.
"What was true at the beginning remains true: This is a sensible business combination and it needs to happen," said shareholder Larry Haverty of Gamco Investors Inc. "Shareholders are out $20 billion, and we have seen no evidence that there is any ray of hope in terms of the performance of this company as an independent entity."
In a letter to Yahoo shareholders, Icahn, who owns about 69 million shares, said he had held frequent discussions with top Microsoft executives including CEO Steve Ballmer during the last week.
Yahoo fired back, accusing the world's largest software maker of teaming up with Icahn to force Yahoo into a transaction that would not be in the best interests of investors. Yahoo said it approached Ballmer in June about a deal but was rebuffed.
If Microsoft really wants to buy Yahoo, the company said in a statement, "we again invite them to make a proposal immediately."
But analysts and shareholders said Microsoft's willingness to revive talks significantly increased the odds that Icahn would prevail.
In another sign of trouble for Yahoo, influential investor Gordon Crawford of Los Angeles-based Capital Research & Management seems to be siding with Icahn.
Crawford had spoken with Icahn and expressed confidence in his plans for Yahoo, a person familiar with the situation said. During a meeting last week, the person said, Crawford told Yang, Yahoo Chairman Roy Bostock and board members Ron Burkle and Gary Wilson that he had lost patience when Yahoo management allowed Microsoft talks to collapse. Capital Research declined to comment.
