Yahoo! delays board nominations

By Stephen Withers
Thursday, 06 March 2008 05:13

Strategy

Yahoo! has extended the deadline for nominations to its board, giving more time for stockholders - including parties that have not taken a stake in the company - to choose their candidates.

The previous cutoff date was March 14, but Yahoo! has changed its bylaws to allow nominations up to ten days following the public announcement of the 2008 company meeting.

One interpretation is that the Yahoo! board is optimistic that it can find an investor prepared to match Microsoft's bid (allowing shareholders that are so inclined to bail out at a reasonably high price) while also allowing the company to continue as an independent entity, or that it can cut a deal with another player (MySpace?) that could restore shareholders' confidence.

This is supported by the company's statement that "To the extent that the extension of the nomination deadline has the effect of postponing the nomination of one or more directors by any party, it will allow Yahoo!'s board to continue to explore all of its strategic alternatives for maximizing value for stockholders without the distraction of a proxy contest."

The Yahoo! annual meeting could be held as late as July 12, giving the existing board several months to come up with a deal before Microsoft can present shareholders with a slate of pro-takeover candidate directors.

Microsoft previously indicated it is prepared for a proxy contest if the directors do not back the takeover, but another possibility is that a raised bid may be all that's necessary to get the proposed deal across the line - especially as Microsoft's own share price has fallen. Microsoft offered a 50:50 mix of cash and shares, so the bid is now worth less than $US29 per share rather than the original $31.

If Microsoft walked away and there was no alternative offer, Yahoo!'s share price could easily drop well below the $US20 level seen prior to the bid.