Tuesday July 15, 03:26 AM
Microsoft-Icahn fire back at Yahoo as tie-up drama continues
By Glenn Chapman
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SAN FRANCISCO (AFP) - Microsoft (NASDAQ: MSFT - news) and Carl Icahn fired back at Yahoo (NASDAQ: YHOO - news) as the corporate raider continues a quest to overthrow the struggling Internet firm's board and form an alliance with the software giant.
Microsoft and Icahn separately accused the embattled Internet pioneer Monday of misrepresenting a Friday offer to buy Yahoo's online search business.
Yahoo vehemently rejected what it derided as a "take it or leave it" proposal from Icahn and Microsoft, saying any notion of accepting it was "ludicrous."
Yahoo said the offer mandated a dismantling of the company and a massive restructuring in which the firm's board and top executives would be replaced.
"This discussion has been mischaracterized as a take it or leave it ultimatum, rather than a timetable in order to move forward to intensive negotiations," Microsoft said in a release.
Icahn fired off a more heated response in a letter to Yahoo shareholders, saying he has never before seen a company "distort, omit and twist events and facts in the manner that Yahoo has done."
Microsoft said the offer stemmed from a telephone conversation with Yahoo board chairman Roy Bostock and that the deal would have guaranteed Yahoo advertising revenues generated by online search advertising.
Terms were negotiable and more time to work out a deal could have been arranged, according to Icahn and Microsoft.
"It looks like Yahoo went to Microsoft and asked them to jump through hoops and then rejected the offer out of hand," said analyst Rob Enderle of Enderle Group in Silicon Valley.
"I think (Microsoft chief executive Steve) Ballmer is pretty peeved about the way it worked out and they feel like they were played."
If it is a tactic by Yahoo to portray Icahn as conspiring with Microsoft to Yahoo's detriment, it could backfire, according to Enderle.
"It kind of smells," Enderle said.
"I'm not convinced the stockholders are in any mood for this kind of shenanigans."
Bostock said the offer was crafted without input from Yahoo and weighted mightily in Microsoft's favor.
"This odd and opportunistic alliance of Microsoft and Carl Icahn has anything but the interests of Yahoo's stockholders in mind," Bostock said in a Saturday statement spurning the latest offer.
The deal called for Yahoo's board to be immediately replaced by an Icahn-led slate and the removal of top Yahoo executives, with co-founder and chief executive Jerry Yang presumably heading the list.
US billionaire Icahn, who has amassed a stake in Yahoo and accuses the board of botching earlier takeover talks with Microsoft, has been trying to convince shareholders to back his slate at a vote during an August 1 annual meeting.
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.
Yahoo later tried to revive talks with Microsoft, with Yahoo rejecting an offer to acquire only its search business and Microsoft saying it was no longer interested in buying all of Yahoo.
Microsoft had wanted Yahoo in order to better battle Google (NASDAQ: GOOG - news) , which claims the lion's share of the multi-billion-dollar Internet search and advertising market.
After ending talks with Microsoft, Yahoo announced an alliance with rival Google to put the Internet search king's expertise to work pumping money from its floundering rival's online advertising.
Yahoo predicts the Google alliance will boost its revenues by 250 to 450 million dollars in its first year.
The plan is being reviewed by US regulators.
Bostock said Yahoo has made it clear it is once again open to selling the entire company to Microsoft for at least 33 dollars per share -- the offer at the beginning of the failed courtship.
Yahoo also told Microsoft it is willing to make a better bargain for only its search business.
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