The Yahoo-Microsoft battle just keeps getting hotter. Investor
Carl Icahn says Yahoo has misrepresented Microsoft’s offer in its weekend rejection
of a deal with the software giant. “Over the years I have attempted to make
changes at many companies but I have yet to see a company distort, omit and
twist events and facts in the manner that Yahoo! has done in their press
release issued Saturday night, July 12th,” Mr. Icahn wrote in a
letter to shareholders that was filed with the SEC.
The war of words started over the weekend when the chairman
of Yahoo, Roy Bostock, called Microsoft’s latest proposal to “ludicrous.” He
was turning down an offer by Microsoft to acquire Yahoo’s search business and
turn the rest of the company over to Mr. Icahn.
One of Mr. Bostock’s complaints was that Microsoft asked for
a response within 24 hours. “While this type of erratic and unpredictable
behavior is consistent with what we have come to expect from Microsoft, we will
not be bludgeoned into a transaction that is not in the best interests of our
stockholders," he said in the statement. Mr. Icahn retorted that Microsoft was willing
to give Yahoo’s board more time if it agreed to postpone its annual shareholder
meeting, set for Aug.1. That meeting is looking more and more like the showdown
at the OK Corral.
Yahoo offered again to sell the entire company to Microsoft
for $33 a share - the amount it had originally rejected - or to work out a better deal on the search unit. But Mr. Icahn,
who brokered a conversation over three days last week between Microsoft CEO
Steve Ballmer, Mr. Bostock and himself, told the Wall Street Journal that
Yahoo’s insistence on keeping Mr. Yang and its current board was to blame. Mr.
Icahn accused Yahoo’s board of being willing “to watch the ship go down rather
than sell the company." He added: "I delivered everything they wanted
but at the end they still didn't want to do a deal."
An SEC filing by Yahoo Monday and Icahn’s letter
confirmed that Microsoft offered $1 billion up front for the search unit and
guaranteed Yahoo $2.3 billion of revenue over the next five years and $3 billion
a year in the following five years. Yahoo says overturning its management team
would create turmoil at the company and that its own projections of revenue are
higher than Microsoft’s proposal.
The deal seems destined to stand until Yahoo’s shareholder
meeting. Yahoo’s shares have been trading in the $22-23 range since the
Microsoft deal fell apart, making a $33 a share offer highly unlikely now. Mr.
Icahn argues in his letter to shareholders that Microsoft’s offer to buy the
search unit and guarantee revenue and the tender for the rest of the shares
would amount to $33 a share.
What puzzles TechSpin is why Microsoft wants to split up the
company now. Yahoo has rich content, including what is probably the best free
site for financial information on the Internet. Not so long ago, Mr. Icahn
himself was arguing against breaking up the company. It may be that after his
experience with MSNBC and with Slate, which Mr. Ballmer sold last year to the
Washington Post, he may think that managing content is too much of a pain.