Icahn tries dealing directly with Microsoft in Yahoo battle

07 Jul 2008 View Comments
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Microsoft still wants to buy Yahoo, but will not deal with its board of directors

Dissident Yahoo investor Carl Icahn has issued an open letter to Yahoo shareholders asking them to oust the board, citing Microsoft CEO Steve Ballmer's willingness to negotiate for the company should the board be replaced.

Icahn says he has had several conversations with Ballmer about the situation at Yahoo, "some have lasted as long as an hour."

Further reading

Icahn's position is backed by Microsoft in an open letter of its own.

In his letter Icahn says: "Much has been said about how badly the Yahoo board has "botched up" negotiations with Microsoft over the past months. There is no need to keep pointing out the mistakes I believe Yahoo made by not immediately taking a $33 offer made by Microsoft. But one thing is clear – Jerry Yang and the board of Yahoo will not be able to "botch up" a negotiation with Microsoft again, simply because they will not have the opportunity. Our company is now moving toward a precipice."

Icahn also attacked the board directly: "According to publicly available information, Google's income from operations grew 59 per cent per year over the last two years, while Yahoo's shrank 21 per cent per year. However, none of the above has caused the Yahoo board to hesitate in paying themselves $10,000 per week. IT IS TIME FOR A CHANGE."

Microsoft issued a response to the letter saying: "In the past week, we have had the opportunity to discuss with Carl Icahn the prospects for a possible agreement between Microsoft and Yahoo.

Despite working since 31 January of this year, as well as in the early part of last year, we have never been able to reach an agreement in a timely way on acceptable terms with the current management and Board of Directors at Yahoo. We have concluded that we cannot reach an agreement with them. We confirm, however, that after the shareholder election, Microsoft would be interested in discussing with a new board a major transaction with Yahoo, such as either a transaction to purchase the "search" function with large financial guarantees or, in the alternative, purchasing the whole company."

Ichan ends his letter: "Move expeditiously to replace Jerry Yang with a new CEO with operating experience."

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