Microsoft
Corporation (NDAQ: MSFT) said today that it might revive takeover talks with Yahoo
Inc. (NDAQ: YHOO) if billionaire activist Carl Icahn's campaign to takeover the
board is successful. Icahn is quickly building momentum ahead of a Yahoo annual meeting
scheduled for next month after he promised to oust the board and chief executive Jerry
Yang in order to pursue a sale. The billionaire activist has already won support from
several hedge funds and is expected to put up a fight.
Icahn insists that Yahoo must combine with Microsoft in order to effectively compete
against Google and has already won backing from large holders, including T. Boone
Pickens, and John Paulson. The reason, according to many, is that any campaign by
Carl Icahn generally draws a great deal of support given his popularity as an activist.
Shareholders also clearly appear to be supporting him as shares rose sharply today
on the news.
Microsoft originally offered around $44.6 billion for Yahoo, which comes in at $31
per share. That's 62% more than the search company's stock price before the takeover
talks. However, the company rejected the offer saying that it was worth more because
of its growth prospects and strong presence in Asia. Unfortunately, conditions have
worsened since then and many investors are wondering if they can even get that much
from Microsoft anymore.
Carl Icahn has nominated nine directors to replace Yahoo's board, including himself,
Mark Cuban, and Frand Biondi Jr. The annual meeting is currently scheduled for August
1st, but it would not be uncommon for the meeting to be delayed if the existing board
feels that they will lose the vote. It will be interesting to see what becomes of
this situation...
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