Battle for Yahoo gets ugly as Icahn steps up attack
Agence France Presse
WASHINGTON - The battle of control for Yahoo took another nasty turn Wednesday as billionaire Carl Icahn accused top management of the Internet giant of deceitful actions to sabotage a takeover bid from Microsoft.
In a statement released after details emerged from a shareholder lawsuit, Icahn said the "best chance" for the struggling firm would be to replace the current board and chief executive Jerry Yang to revive the Microsoft bid.
Icahn, citing details from the legal complaint, said he believes Yang and the board were deceitful in negotiations with Microsoft.
"Most importantly, Microsoft might never be able to trust a CEO and board who, while claiming to be negotiating in good faith, went behind their back and adopted a 'plan' which not only sabotages any Microsoft acquisition but went so far as to completely disable its own ability to rescind the 'plan' as long as Microsoft's offer remains pending," Icahn said.
The plan that Icahn refers to relates to an employee retention mechanism the complaint said was put in place "to sabotage a Microsoft bid," according to the statement, which was an open letter to Yahoo's board.
The plan allows Yahoo employees to leave with hefty severance payments in the event of a takeover, making a bid more expensive.
Icahn said the deal is effectively a 2.4 billion dollar "poison pill."
He said the board should "simply rescind the poison pill 'severance plan,' which would free up approximately 2.4 billion dollars and possibly even more which could be added to the bid."
The latest barbs from Icahn sets up a proxy fight at the company's annual shareholder meeting, which has been rescheduled to August 1. Yahoo's board is urging stockholders to reject Icahn's proposed slate of directors.
Icahn said last month in an open letter that Yahoo "completely botched" merger talks with Microsoft and that he was amassing Yahoo stock to oust the board of directors at the shareholders meeting.
Icahn has acquired 59 million shares of Yahoo -- around four percent of its capital -- and had formed a 10-person slate which will stand for election against the current board.
Earlier this week, details of a shareholder lawsuit unveiled in Delaware showed Microsoft offered 40 dollars a share to buy Yahoo in 2007, well above the 31 dollars proposed in January.
Microsoft says it broke off takeover talks in late April after it upped its bid by three billion dollars and Yahoo's board still wanted more.
In his latest letter to Yahoo chairman Roy Bostock, Icahn said: "I have constantly complained about how far CEOs and boards will go in order to retain their jobs, yet even I am amazed at the length Jerry Yang and the Yahoo board have gone to in order to entrench their positions and keep shareholders from deciding if they wished to sell to Microsoft."
Icahn added: "Until now I naively believed that self-destructive doomsday machines were fictional devices found only in James Bond movies. I never believed that anyone would actually create and activate one in real life. I guess I never knew about Yang and the Yahoo board."
Icahn argued that he and many other shareholders "believe that the only way to salvage Yahoo in the long if not short run is to merge with Microsoft."
But he argued that "in light of Yang and the board's recent actions in response to Microsoft's overtures, it may be too late to convince Microsoft to trust Yang and the current board to run the company" during any negotiating process.
"Therefore, the best chance to bring Microsoft and Yahoo together is to replace Yang and the current Yahoo board with a board that will negotiate in good faith with Microsoft and in whom Microsoft will have trust to operate the company during the long period between signing and closing," he said.