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Microsoft says it would deal with new Yahoo board
- — 08 July, 2008 08:25
In a statement Monday, Microsoft confirmed that it would be interested in resuming talks with Yahoo with a new board of directors, both to buy the search business or the entire company.
Billionaire investor Carl Icahn, who has been pushing for a deal with Microsoft and has proposed a new slate of Yahoo directors, also issued a letter Monday, confirming that he has discussed the scenario "frequently" during the past week with Microsoft CEO Steve Ballmer and other executives.
Yahoo officials were not immediately available for comment.
In its statement, Microsoft said that, after Yahoo's shareholder meeting this quarter, it 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."
Microsoft also noted that it talks with the current board have reached an impasse. "Despite working since January 31 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!," Microsoft's statement said. " We have concluded that we cannot reach an agreement with them."
Ballmer expressed worry that the current board could mismanage the company during the months it would take for a sale to gain regulatory approval, putting Microsoft's investment at risk, according to Icahn.
Icahn has nominated a number of candidates to be named to the board at the company's August shareholder meeting. In the letter, he said he has "little doubt" that a new board will immediately begin negotiations with Microsoft and "move expeditiously" to replace current CEO Jerry Yang "with a new CEO with operating experience."
"There is no need to keep pointing out the mistakes I believe Yahoo! made by not immediately taking a US$33 offer made by Microsoft. But one thing is clear -- Jerry Yang and the current board of Yahoo! will not be able to 'botch up' a negotiation with Microsoft again, simply because they will not have the opportunity," Icahn wrote.
"Our company is now moving toward a precipice," he added. "It is currently losing market share in its 'Search' function; our current Board has failed to bring in a talented and experienced CEO to replace Jerry Yang and return Jerry to his role as Chief Yahoo!, and currently it is witnessing a meaningful exodus of talent."
Microsoft first made an unsolicited offer to buy Yahoo earlier on February 1 -- a US$44.6 billion cash-and-stock deal that offered shareholders a 62 per cent premium over Yahoo's stock price the day before of US$19.18.
But 10 days later, Yahoo's board rejected that offer, saying it undervalued the company. That day, February 11, Yahoo's stock closed at almost US$30.
Microsoft later increased its offer to US$33 per share, or about US$47.5 billion, but Microsoft eventually walked away from the negotiations on May 3 after the two sides failed to agree on a price.
Since then, Microsoft officials have repeatedly said the company isn't interested in acquiring all of Yahoo. Later, Microsoft did offer to buy Yahoo's search advertising business, but those negotiations also fell through. Yahoo instead struck a more limited deal to outsource part of its search ad business to Google.