Yahoo Rejects Another Bid From Microsoft, Icahn

Last night Yahoo rejected another offer for its search business from Microsoft and investor Carl Icahn. The proposal also included conditions that would have required the replacement of Yahoo's top management and board of directors. This is not the first time Icahn has pushed for such a measure. Quoting: "Yahoo said in rejecting the offer it told Microsoft it was willing to sell the entire company for at least $33 a share and its board believed such a deal could be negotiated and executed before its annual shareholders meeting on August 1. Yahoo said it also informed the software giant it remained willing to negotiate an 'improved search-only transaction.' Microsoft, however, rejected both offers, Yahoo stated."

Comments

I hope yahoo stands firm

[DarkOx]

This is about as hostile now as these types of deals get. Microsoft won't make an offer Yahoo's current board will accept so, they are openly asking shareholders to vote the current board out so they can replace it with one lead by Carl Icahn.

Investors are always looking at the short term these days so they will probably do it, which is dumb. I mean really, Microsoft is basically saying "Help us replace your board of directors with one sympathetic to us, oh and hey no worries we still make a purchase offer in your best interests."

I know one thing if I had any plans to hold Yahoo stock for past next few months I'd be voteing to keep the current board. I would probably be out numbered though by the guys who just want to keep the stock long enough that it looks like a deal will happen and the price runs up so they can then dump it before the specifics of the deal which would no doubt be favorable to Microsoft are revealed. With that in mind like many little investors I will probably have to jump on the bandwagon and get while the gettins good if the board is voted out. Yahoo its been nice knowing you but Wall Steet is going to sell you out for a quick cash grab.

Re:I hope yahoo stands firm

[Metaldsa]

But the first board is tainted in a sense. $31 was a great deal. $33 was even better. Asking for $40 was just greedy and it bit them in the ass. Yahoo is a $19 stock and if investors want to make 50% return than they should sell off to MS. Icahn isn't going to get screwed over.

Re:I hope yahoo stands firm

[speedtux]

The problem Yahoo has is that it has some great properties, but it can't monetize those properties.

And Microsoft would do any better? Have you looked at how badly Microsoft's own on-line efforts have been going? Microsoft doesn't know what they are doing, and they'd run Yahoo into the ground even faster.

Yahoo should have taken Microsoft's money and run, but afterwards, Microhoo would have failed as surely as Microsoft and Yahoo are failing separately.

Re:I hope yahoo stands firm

[the_womble]

Where exactly does MS hating come into my argument?

MS does not seem to be anything like as well run under Ballmer as it used to be my Bill Gates.

In addition, it is not in MS's interests for Yahoo to be well run as an independent entity. MS wants to buy Yahoo, or bits of it, as cheaply as possible.

The cleverest thing for MS to do at this point would be to keep the uncertainty going for as long as possible, cause as much disruption as possible, watch the price fall and aim to buy selected bits (the search engine, at least) as cheaply as possible.

In other words, it is precisely because I think MS is competent, that I think a board chosen by MS would be a bad thing for Yahoo.

Once MS buy, they might well return a better profit than the current Yahoo board. That is another matter entirely. Personally I doubt it, because big takeovers rarely work out well.

Back Pocket

[mrbill1234]

Icahn is only interested in his back pocket, not the interest of shareholders, or the employees of Yahoo. He is acting like a little child because he can't get his way.

Re:Back Pocket

[DancesWithBlowTorch]

Icahn is only interested in his back pocket, not the interest of shareholders, or the employees of Yahoo.

Well, Icahn is a shareholder in yahoo. And I would be surprised to find out the other shareholders are not interested in "their backpockets".

Now, I agree that the whole thing sucks for yahoo's employees. But that's the way the system works. It's called capitalism because the capital controls the system, not employeeism. Within the bounds of this system, Icahn has a perfectly valid point: He thinks Microsoft is offering a great deal to Yahoo's shareholders, and since Yahoo's board has to answer to the shareholders (and only the shareholders), he thinks they are not doing their job well.

Honestly: Jerry Wang is as rich as he is because he sold his company to outside investors (by going public). He can't cry foul now that they want to act out their control over the company he sold them.

Re:Back Pocket

[gtall]

"He thinks Microsoft is offering a great deal to Yahoo's shareholders,..."

There is no basis of fact for this statement. Right now, it isn't clear (given the discussion) whether it is best for Yahoo's shareholders or for Carl Icahn.

My own belief is that Icahn is only interested in Icahn. He's not a young man. He thinks short term, but he's certainly not the only one and sometimes it makes sense to think short term. I do not believe this is one of those times. A good management could make Yahoo again a rising force. I'm not convinced Yang is that management. However, I do not believe Microsoft is that management either. Icahn certainly is not.

(in my opinion again) let's consider what Icahn actually is. Is he a technophobe? I see no evidence. His track record is basically acting like a vulture. He sees companies he thinks are undervalued, for whatever reason even if he does not understand the reason, calculates what chance he has of selling the company to an entity who will give him a decent return were he to buy enough stake in the company to make that happen, and then decides what to do. Is this the man who has the best interest in Yahoo, their shareholders , and last but apparently least here, their employees? I think not.

Gerry

Re:Vlad

[florin]

Jerry and his cronies clearly don't want them to fuck off. Look at them, they're now even setting a target for the deal at 33$ per share - which was already offered and rejected earlier. So they've resigned to a pyrrhic victory, and rightfully so, because they know Yahoo is an empty bubble of a company and a shitty buy even at the 23$ the share is supposedly worth right now. Microsoft should take their money and run.

Re:Vlad

[the_womble]

Well, $40 was a negotiating position, they would probably have accepted a bit more than the offer. They also have a clear duty to the shareholders to extract the most than MS would pay.

There is also the risk involved in the deal. There is a very good chance that it would have been blocked by regulators, or only been allowed with conditions would have caused MS to walk away. Would regulators let the two biggest webmail providers combine? Let two major IM networks combine? Allow MS to buy out a promising competitor to Exchange? Allow two major portal sites to combine?

If the deal had been agreed and then blocked, Yahoo shareholders would have been left a lot worse off.

Re:Company makes money

[Keeper Of Keys]

Point 2) breaks down as:

2a) Pay your existing workforce less (ie keep pay increases below inflation);
2b) Sack them and replace them with low-paid new graduates;
2c) outsource to a country where wages are lower;

However, it's actually worse than that, because profit is measured by its rate of change. Investors will withdraw their money if the profit rate of another company is higher. But the more money you've already made, the more extra profit you must make to make that percentage look attractive.