Yahoo! rejects ‘opportunistic’ bid from Microsoft/Icahn

14 Jul 2008

“Odd and opportunistic” are the words Yahoo! has attributed to Microsoft and Carl Icahn’s latest offer to replace its board and buy its search business.

According to reports, Yahoo! repeated an offer to sell all of the company to Microsoft for at least US$33 a share, with a view to executing the transaction before the company’s AGM in August.

Yahoo! also said it had offered to negotiate an improved search-only sale to Microsoft but the software giant rejected both offers.

In May, Microsoft abandoned its bid to buy Yahoo! for US$47.5bn and since then a lot of flack from shareholders has been directed at the board of Jerry Yang, with the situation inflamed by corporate raider Carl Icahn, who in recent weeks formed an alliance with Microsoft.

According to reports, Yahoo! received an offer on Friday night for a complex restructuring that would have seen Microsoft acquire its search business.

Yahoo! said it was given less than 24 hours to consider the proposal, dubbed a “take-it or leave-it offer”.

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Yahoo! said it has rejected the proposal in the best interests of shareholders and cited its recent deal with Google as affording superior financial value and less risk.

“Yahoo!’s existing business, plus its recently signed commercial agreement with Google, has superior financial value and less risk than the Microsoft/Icahn proposal.

“The Microsoft/Icahn proposal would preclude a potential sale of all of Yahoo for a full and fair price, including a control premium.”

Yahoo! added that the proposal would require the immediate replacement of the board, as well as top management, which it said would destabilise the company during the year it would take to get regulatory approval for the deal.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years

editorial@siliconrepublic.com