Icahn launches Yahoo proxy fight, may boost stake by $2.5 billion
Billionaire shareholder activist Carl Icahn on Thursday formally announced that he is launching a proxy fight and has formed a 10-member slate in an effort to unseat Yahoo's current board at the company's annual shareholders meeting on July 3.
Icahn, who stated he has acquired roughly 59 million shares of Yahoo, has also sought antitrust clearance from the Federal Trade Commission to acquire up to another $2.5 billion in Yahoo shares.
Carl Icahn: Yahoo's board 'acted irrationally' in rejected Microsoft's offer of $33 per share.
(Credit: CNET Networks)Microsoft earlier this month walked away from its multibillion-dollar bid to buy Yahoo when the two companies failed to come to agreement over the purchase price.
Icahn has been making his mark in the tech industry of late, most notably in the last year or so with his actions regarding Motorola and BEA Systems. Over the past 13 years, he's logged more wins than losses in his proxy fights, according to FactSet SharkWatch.
Here is a copy of Icahn's letter to Yahoo Chairman Roy Bostock:
Roy Bostock
Chairman
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089Dear Mr. Bostock:
It is clear to me that the board of directors of Yahoo has acted irrationally and lost the faith of shareholders and Microsoft. It is quite obvious that Microsoft's bid of $33 per share is a superior alternative to Yahoo's prospects on a standalone basis. I am perplexed by the board's actions. It is irresponsible to hide behind management's more than overly optimistic financial forecasts. 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. 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.
During the past week, a number of shareholders have asked me to lead a proxy fight to attempt to remove the current board and to establish a new board which would attempt to negotiate a successful merger with Microsoft, something that in my opinion the current board has completely botched. I believe that a combination between Microsoft and Yahoo is by far the most sensible path for both companies. I have therefore taken the following actions: (1) during the last 10 days, I have purchased approximately 59 million shares and share-equivalents of Yahoo; (2) I have formed a 10-person slate which will stand for election against the current board; and (3) I have sought antitrust clearance from the Federal Trade Commission to acquire up to approximately $2.5 billion worth of Yahoo stock. The biographies of the members of our slate are attached to this letter. A more formal notification is being delivered today to Yahoo under separate cover.
While it is my understanding that you do not intend to enter into any transaction that would impede a Microsoft-Yahoo merger, I am concerned that in several recent press releases you stated that you intend to pursue certain "strategic alternatives". I therefore hope and trust that if there is any question that these "strategic alternatives" might in any way impede a future Microsoft merger you will at the very least allow shareholders to opine on them before embarking on such a transaction.
I sincerely hope you heed the wishes of your shareholders and move expeditiously to negotiate a merger with Microsoft, thereby making a proxy fight unnecessary.
Sincerely yours,
CARL C. ICAHN
Dawn Kawamoto covers enterprise security and financial news relating to technology for CNET News. E-mail Dawn.
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Yahoo-Microsoft will go the way of:
*Sprint-Nextel,
*AOL-Time Warner,
*Excite-@Home Network,
*AT&T Broadband,
*MCI-WorldCom,
*Enron,
*Bear Stearns,
*Qwest-US West,
and all the rest of the companies ruined by too much Shareholder greed...
He lost his father at 2 years old age and His mother raised him all by herself.
Mr. Carl Icahn should know better not oppress an orphan and alien.
BEA's sale to Oracle was mind-boggling because Oracle already has a competitive offering. Oracle will either have to spend time and resources maintaining two app server products, or it will have to integrate the two products and migrate customers to the result. In either case, the customer loses.
A Yahoo sale to Microsoft would be fundamentally damaging to the internet ecosystem. A "Microhoo" would either have to maintain two internet portal sites, or it would have to integrate the two. In the first case, the customer loses because a company splitting its focus is less nimble. In the second case, the customer loses because of a reduction in choice. Furthermore, the value of the deal is predicated on the idea that they can move forward together better than apart. This will be difficult to accomplish if the combined company faces a talent exodus. Each company is better off focusing on their own -- separate -- strategies.
Keep in mind, as Mr. Gordon Gecko explained to us all, Greed is good....
When Mr. Icahn turns a profit, his hedge fund investors turn a profit. His justifications for his actions are for the betterment of those who invest in him. He does not have personal sentiments for Mr. Yang, or other entreprenuers...
Agree, or disagree, these are the actions that build Billionaires.
This is the same investor who drove TWA into bankruptcy while kicking off his website lowestfare.com in the mid 90's.
Will Circuit City be his next "investment"???