Yahoo Chief Executive Jerry Yang said today a proposal by billionaire investor Carl Icahn “will destroy shareholder value.”
In a letter to shareholders also signed by Chairman Roy Bostock, Yang called Icahn a “corporate agitator with a short-term approach to his investments.” That is why he wants the Internet giant to strike a deal with Microsoft, repeatedly rebuffed by the Sunnyvale company in its efforts to take over part or all of Yahoo, he said.
Icahn began his battle with Yahoo after the company rejected Microsoft’s $44.6 billion. He wants to replace Yang and the Yahoo board at the upcoming Aug. 1 shareholders meeting. He has proposed nine candidates, including himself and Dallas Mavericks basketball team owner Mark Cuban.
Yang accused Icahn of pursuing a short-term strategy with an “incentive to strike any deal with Microsoft that enables him to recover his investment and get back his money quickly, even a deal that does not provide full and fair value to you,” the letter said. “Is that in the interests of all stockholders? Clearly, it is not.”
Under Icahn’s deal, Yahoo would sell its search business to Microsoft for $7.7 billion. Shareholders would receive $16.25 a share in a distribution made up of cash and stock, and Yahoo would be left as a stand-alone company that provides Internet content. Icahn estimates that $9 of the distribution would come from the sale of Yahoo’s investments in Asian Internet companies.
The latest Microsoft-Icahn proposal is more “smoke and mirrors” than a legitimate offer, Yang said. While it was an improvement over Microsoft’s previous proposal to acquire Yahoo’s search business, “no one should confuse a modestly improved offer with a good offer.”
In the letter, the executives said the Yahoo board is willing to sell the company to Microsoft for at least $33 a share; sell only its search operation “as long as it provides real value to our stockholders and resolves the substantial execution and operational risks associated with the separation of our search and display businesses.” The board is also examining spinning off of its Asia business.
Contact John Boudreau at jboudreau@mercurynews.com or (408) 278-3496.
