Icahn launches bid to take Yahoo board
The proxy battle is on as the billionaire investor backs an alternate slate of directors, saying the company fumbled takeover negotiations with Microsoft.
SAN FRANCISCO — Saying Yahoo Inc.’s board "completely botched" takeover talks with Microsoft Corp., billionaire investor Carl Icahn today 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% 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% 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 this month withdrew a $47.5-billion offer for Yahoo after they failed to agree on a price.
Both companies declined to comment.
Yahoo rose 61 cents to $27.75, while Microsoft gained 52 cents to $30.45.
Yahoo is vulnerable to a proxy battle for control of the company because it does not have a "staggered" board of directors. That means 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, or "poison pill," 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 today that it had bought 50 million Yahoo shares and would support Icahn's slate.
"We were disappointed that Yahoo failed to reach an agreement with Microsoft," the firm said in a statement. "We continue to believe that a combination between Yahoo and Microsoft would form a dynamic company and a stronger competitor to Google."
