Tuesday July 8, 03:04 AM
Microsoft would reopen Yahoo talks with new board
By Glenn Chapman
SAN FRANCISCO (AFP) - Yahoo (NASDAQ: YHOO - news) 's stock price jumped nearly 12 percent after Microsoft (NASDAQ: MSFT - news) said Monday it is willing to reopen talks on a "major transaction" with Yahoo if the Internet giant replaces its board of directors.
The world's biggest software firm confirmed comments from corporate raider Carl Icahn about talks that could lead to a new takeover bid if Yahoo replaces its directors next month.
"We confirm... that after the shareholder election Microsoft would be interested in discussing with a new board a major transaction with Yahoo, such as either a transaction to purchase the 'Search' function with large financial guarantees or, in the alternative, purchasing the whole company," Microsoft said.
Yahoo's stock price climbed nearly 12 percent to close at 23.91 dollars per share on news that Microsoft remains a potential suitor, even though Microsoft said it would be premature to discuss price or other terms of a possible transaction.
Icahn made his remarks in an open letter to Yahoo shareholders nearly a month after the California company said negotiations on a tie-up with Microsoft were apparently dead.
The US billionaire, who has amassed a stake in Yahoo and is seeking to oust the company's board, said he had "spoken frequently" with Microsoft chief executive Steve Ballmer and others at the Redmond, Washington-based firm in recent days.
"Our talks centered on the industry in general but, more importantly, on how Yahoo and Microsoft can do a transaction together" Icahn said.
"Steve made it abundantly clear that, due to his experiences with Yahoo during the past several months, he cannot negotiate any transaction with the current board."
Yahoo defended its handling of the takeover bid and accuses Microsoft of joining forces with Icahn to overthrow its directors.
"Now Mr. Ballmer and Mr. Icahn have teamed up in an apparent effort to force Yahoo into selling to Microsoft its Search business at a price to be determined in a future 'negotiation' between Mr. Icahn's directors and Microsoft's management," Yahoo said.
Yahoo said its board approached Ballmer as recently as June to renew takeover talks, but was told Microsoft was no longer interested.
"If Microsoft and Mr. Ballmer really want to purchase Yahoo, we again invite them to make a proposal immediately," Yahoo said.
"And if Mr. Icahn has an actual plan for Yahoo beyond hoping that Microsoft might actually consummate a deal which they have repeatedly walked away from, we would be very interested in hearing it."
Microsoft offered to buy Yahoo for 44.6 billion dollars in stock and cash on January 31, but withdrew its offer on May 3, saying Yahoo refused to budge despite the software giant upping its offer to nearly 50 billion dollars.
Microsoft subsequently announced it had reopened negotiations with Yahoo on "an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo."
After ending talks with Microsoft, Yahoo announced an alliance with rival Google (NASDAQ: GOOG - news) to put the Internet search king's expertise to work pumping money from its floundering rival's online advertising. The plan is being reviewed by the US regulators.
Yahoo hopes the alliance will bolster its sagging fortunes and help stave off a campaign by Icahn to overthrow its board of directors at an August 1 shareholder meeting.
"If and when elected, I strongly believe that in very short order the new board would, subject to its fiduciary duties, be presenting to shareholders either a purchase offer for the whole company or a very attractive offer to purchase 'Search' with large guarantees," Icahn said.
Icahn repeated his charge that Yahoo's board and CEO Jerry Yang had "botched up" negotiations with Microsoft over the past months.
Some reports said Yahoo is seeking other alliances to fend off a bid from Microsoft, including a tie-up with AOL (NYSE: TWX - news) , a unit of Time Warner.
An Icahn-Microsoft alliance should sway Yahoo shareholders hurting from loses suffered as Yahoo's stock price has steadily sunk, according to analyst Rob Enderle of Enderle Group in Silicon Valley.
Speculation about a Microsoft deal would likely cause Yahoo's stock price to jump in the wake of an Icahn board victory, giving short-term investors a chance to sell.
"I think Carl's chances are pretty high," Enderle said. "Microsoft may not want all of Yahoo, but they certainly don't want Google to get part of it."
"Clearly, Microsoft is interested in blocking Google. There is no love lost between these companies. Google has it in its DNA as a primary goal to put Microsoft out of business."
|
|
|
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View
