Yahoo! Inc turned away a proposal by Microsoft and activist shareholder Carl Icahn. The new proposal would have broken off Yahoo’s search business to be sold to Microsoft while the rest of the business would be left under the control of Ichan’s new board.Yahoo! balked calling it an “odd and opportunistic alliance” that doesn’t consider the best interest of Yahoo’s shareholders and investors. Yahoo Chairman Roy Bostock also made a statement that Microsoft and Ichan brought a “take it or leave it” offer. He said “It is ludicrous to think that our board could accept such a proposal. We will not be bludgeoned into a transaction that is not in the best interest of our stockholders.” Yahoo noted that Microsoft and Icahn did try to sweeten the offer by offering to buy $8 billion in Yahoo shares for $35 each in addition to purchasing the search business for $1 billion dollars. Yahoo! and MSN would also have struck a long term search engine partnership that would have generated more revenue for Yahoo!.This is probably the last proposal to be brought to the table before the upcoming shareholder meeting on Aug 1st which is expected to be a heated battle as Yahoo’s CEO Jerry Yang and Icahn fight for the control of the board.Yahoo! would have been opened to selling at $33 a share which was the last price Microsoft offered 6 months ago. The original offer was $44.6 billion.

Paul Lee
Sr. Manager of Web Marketing
LeadQual - Search Engine Marketing

Is Yahoo quietly trying to get bought out by Microsoft?

“But the story didn’t quite end there. Since then, Microsoft and Yahoo have gone back to the table twice. First, Microsoft entertained the possibility of acquiring Yahoo’s search for $1 billion and a buyback of Yahoo stock for $8 billion. After that deal fell through, we once again thought it was over. But now, they’re back to talking about a full buyout and Jerry Yang, not Ballmer, is starting to look like the CEO who really wants to get the deal done.”

“Sources close to the deal told TechCrunch that Yahoo “offered to sell to Microsoft for the low $30s per share, and below Microsoft’s original offer immediately before they signed the Google search deal.” And although that smacks of desperation, there’s even more trouble afoot for Yang and company. “

Jerry Yang is in quite a predicament. Shareholders want him to sell, yet due to their pressure he has little negotiation leverage thus forcing him to sell much cheaper than he would have wanted. But if he sells at a low price, stockholders would be even more discontent that he let the original deal get away. If he doesn’t sell, the next August 1 shareholder meeting is going to be a battle he won’t want to deal with. Lose-Lose situation. What is it going to be Jerry?

Paul
Sr. Manager of Web Marketing
LeadQual