Yahoo has vehemently rejected a deal proposed by Microsoft and corporate raider Carl Icahn that it said would have led to the sale of its online search business to the US software giant. Yahoo said it received a "take it or leave it" proposal from Icahn and Microsoft late Friday calling for a massive restructuring of the California firm that would include the acquisition of Yahoo's search business by Microsoft.
The new proposal came two months after Microsoft withdrew an offer to buy Yahoo after the two sides failed to reach an agreement. Microsoft and Icahn gave the Yahoo board less than 24 hours to decide on their joint proposal, which was non-negotiable, Yahoo board chairman Roy Bostock said Saturday in a statement.
"This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo's stockholders in mind," Bostock said. "While this type of erratic and unpredictable behaviour 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."
Bostock called any notion of accepting the offer "ludicrous," saying it was crafted without input from Yahoo and weighted mightily in Microsoft's favour. "Clearly, Microsoft, having failed to advance in search, is aligning with the short-term objectives of Mr Icahn to coerce Yahoo into selling its core strategic search assets on terms that are highly advantageous to Microsoft, but disadvantageous to Yahoo stockholders," he said.
The deal called for Yahoo's board to be immediately replaced by an Icahn-led slate and the removal of top Yahoo executives, with co-founder and chief executive Jerry Yang presumably heading the list. US billionaire Icahn, who has amassed a stake in Yahoo and accuses the board of botching earlier take-over talks with Microsoft, has been trying to convince shareholders to back his slate at a vote during an August 1 annual meeting.
"Microsoft and Mr Icahn are trying to dismantle the company and deliver our search business to Microsoft on terms that would be disadvantageous to Yahoo stockholders," Bostock said.
"We are prepared to let our stockholders, not Microsoft and Carl Icahn, decide what is in their best interests and we look forward to the upcoming vote." Yahoo maintains that a search alliance it made with Google in the wake of failed tie-up talks with Microsoft is a smarter deal than the one brought to its doorstep by Icahn.
Microsoft offered to buy Yahoo for 44.6 billion dollars in stock and cash on January 31, but withdrew its offer on May 3, saying Yahoo refused to budge despite the software giant upping its offer to nearly 50 billion dollars. Yahoo later tried to revive talks with Microsoft, with Yahoo rejecting an offer to acquire only its search business and Microsoft saying it was no longer interested in buying all of Yahoo.
Microsoft had wanted Yahoo in order to better battle Google, which claims the lion's share of the multi-billion-dollar Internet search and advertising market. After ending talks with Microsoft, Yahoo announced an alliance with rival Google to put the Internet search king's expertise to work pumping money from its floundering rival's online advertising.
Yahoo predicts the Google alliance will boost its revenues by 250 to 450 million dollars in its first year. The plan is being reviewed by US regulators. Bostock said that while spurning the Icahn-Microsoft offer Yahoo made it clear it is once again open to selling the entire company to Microsoft for at least 33 dollars per share-the offer at the beginning of the failed courtship.
Yahoo's stock price finished trading Friday on Wall Street at 23.57 dollars per share. Yahoo also told Microsoft it is willing to make a better bargain for only its search business. Microsoft rejected both of Yahoo's offers, Bostock said.
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