[Ars] MicroHoo 2.0: Icahn tries to revive a dead deal - Overclock.net

rabidgnome229 · 05-16-08

Quote:

Just when we thought the MicroHoo saga was over, Carl Icahn steps in and stirs up some fresh excitement. The famed and ultrarich activist investor submitted an alternative slate of Yahoo directors just before the deadline, and he hopes to revive Microsoft's interest in a deal.

Rekindling the flame
Icahn is putting his money where his mouth is, too. According to the proxy statement he filed with the SEC, Icahn bought 59 million Yahoo shares in the last ten days, forming a $1.6 billion stake in the company, and he's seeking regulatory approval to increase that stake to $2.5 billion. According to SEC documents, Icahn did not own any Yahoo stock as of March 31, 2008. Given the stock's vacillations around $27 per share in the relevant time frame, a $2.5 billion investment would bring in about $500 million in net gains if Microsoft's stated willingness to pay $33 per share comes to fruition.

"It is quite obvious that Microsoft's bid of $33 per share is a superior alternative to Yahoo's prospects on a standalone basis," Icahn said. "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 goes on to detail how "a number of shareholders" approached him to lead a proxy fight to restart the severely stalled negotiations and says that the current board "completely botched" the deal. They "acted irrationally and lost the faith of shareholders and Microsoft," and Icahn stands "perplexed by the board's actions." Carl doesn't seem to believe in the spoonful of sugar school of diplomacy, and his proposed director slate includes similarly outspoken candidates like Mark Cuban.

Cold shoulder
Yahoo chairman Roy Bostick thinks that Icahn's 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." According to his own open letter to Icahn, Microsoft threw up its hands and walked away from negotiations within hours of naming that $33 price. "Yahoo's current board has the independence, the knowledge, and the commitment to navigate the Company through the rapidly changing Internet environment and to deliver value for Yahoo and its stockholders," Bostick said.

Icahn's 59 million shares and equivalents amount to 4.2 percent of the voting stock, and according to Silicon Alley Insider, his proxy ballot may have as much as 35 percent of shareholder votes "in the bag" already. I still think that Yahoo plus MSN equals less than Yahoo alone and that the resulting brain drain alone should be reason enough to nix this deal. But Icahn might get his way, in which case we'll see the actual damage for ourselves.

Via Ars Technica

DuckieHo · 05-16-08

Just a quick law note, a stockholder must declare their intent once they own 10% of shares. Guess Carl wants to make sure everyone knows what he wants.

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[Ars] MicroHoo 2.0: Icahn tries to revive a dead deal

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